Correlation Between Maker and ApeCoin

Can any of the company-specific risk be diversified away by investing in both Maker and ApeCoin at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Maker and ApeCoin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Maker and ApeCoin, you can compare the effects of market volatilities on Maker and ApeCoin and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Maker with a short position of ApeCoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maker and ApeCoin.

Diversification Opportunities for Maker and ApeCoin

0.81

Correlation Coefficient

Maker  ApeCoin

Very poor diversification

The 3 months correlation between Maker and ApeCoin is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Maker and ApeCoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ApeCoin and Maker is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Maker are associated (or correlated) with ApeCoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ApeCoin has no effect on the direction of Maker i.e., Maker and ApeCoin go up and down completely randomly.

Pair Corralation between Maker and ApeCoin

Assuming the 90 days trading horizon Maker is expected to generate 0.84 times more return on investment than ApeCoin. However, Maker is 1.18 times less risky than ApeCoin. It trades about 0.01 of its potential returns per unit of risk. ApeCoin is currently generating about -0.12 per unit of risk. If you would invest  180,905  in Maker on November 28, 2024 and sell it today you would lose (19,228) from holding Maker or give up 10.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Maker  vs.  ApeCoin

Maker

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maker has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Maker is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ApeCoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days ApeCoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for ApeCoin shareholders.

Pair Trading with Maker and ApeCoin

The main advantage of trading using opposite Maker and ApeCoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maker position performs unexpectedly, ApeCoin can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ApeCoin will offset losses from the drop in ApeCoin's long position.

The idea behind Maker and ApeCoin pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.