Correlation Between MONA and Tokocrypto

Can any of the company-specific risk be diversified away by investing in both MONA and Tokocrypto 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 MONA and Tokocrypto into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MONA and Tokocrypto, you can compare the effects of market volatilities on MONA and Tokocrypto 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 MONA with a short position of Tokocrypto. Check out your portfolio center. Please also check ongoing floating volatility patterns of MONA and Tokocrypto.

Diversification Opportunities for MONA and Tokocrypto

0.6

Correlation Coefficient

MONA  Tokocrypto

Poor diversification

The 3 months correlation between MONA and Tokocrypto is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MONA and Tokocrypto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokocrypto and MONA 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 MONA are associated (or correlated) with Tokocrypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokocrypto has no effect on the direction of MONA i.e., MONA and Tokocrypto go up and down completely randomly.

Pair Corralation between MONA and Tokocrypto

Assuming the 90 days trading horizon MONA is expected to under-perform the Tokocrypto. But the crypto coin apears to be less risky and, when comparing its historical volatility, MONA is 1.31 times less risky than Tokocrypto. The crypto coin trades about -0.01 of its potential returns per unit of risk. The Tokocrypto is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Tokocrypto on November 19, 2024 and sell it today you would lose (5.00) from holding Tokocrypto or give up 13.89% of portfolio value over 90 days.

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

MONA  vs.  Tokocrypto

MONA

Risk-Adjusted Performance

Very Weak

Over the last 90 days MONA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for MONA shareholders.

Tokocrypto

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tokocrypto are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Tokocrypto exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MONA and Tokocrypto

The main advantage of trading using opposite MONA and Tokocrypto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MONA position performs unexpectedly, Tokocrypto 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 Tokocrypto will offset losses from the drop in Tokocrypto's long position.

The idea behind MONA and Tokocrypto 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 Global Correlations module to find global opportunities by holding instruments from different markets.