Correlation Between Neptune Digital and DeFi Technologies

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

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

Diversification Opportunities for Neptune Digital and DeFi Technologies

0.25

Correlation Coefficient

Neptune Digital  DeFi Technologies

Modest diversification

The 3 months correlation between Neptune and DeFi is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Neptune Digital Assets and DeFi Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DeFi Technologies and Neptune Digital 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 Neptune Digital Assets are associated (or correlated) with DeFi Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DeFi Technologies has no effect on the direction of Neptune Digital i.e., Neptune Digital and DeFi Technologies go up and down completely randomly.

Pair Corralation between Neptune Digital and DeFi Technologies

Assuming the 90 days horizon Neptune Digital Assets is expected to generate 1.57 times more return on investment than DeFi Technologies. However, Neptune Digital is 1.57 times more volatile than DeFi Technologies. It trades about 0.15 of its potential returns per unit of risk. DeFi Technologies is currently generating about 0.0 per unit of risk. If you would invest  55.00  in Neptune Digital Assets on December 1, 2024 and sell it today you would earn a total of  46.00  from holding Neptune Digital Assets or generate 83.64% return on investment over 90 days.

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

Neptune Digital Assets  vs.  DeFi Technologies

Neptune Digital Assets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neptune Digital Assets are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Neptune Digital reported solid returns over the last few months and may actually be approaching a breakup point.

DeFi Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days DeFi Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DeFi Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Neptune Digital and DeFi Technologies

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

The idea behind Neptune Digital Assets and DeFi Technologies 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.

Check out your portfolio center.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.