Correlation Between Phala Network and Alephium

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

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

Diversification Opportunities for Phala Network and Alephium

0.1

Correlation Coefficient

Phala Network  Alephium

Average diversification

The 3 months correlation between Phala and Alephium is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Phala Network and Alephium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alephium and Phala Network 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 Phala Network are associated (or correlated) with Alephium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alephium has no effect on the direction of Phala Network i.e., Phala Network and Alephium go up and down completely randomly.

Pair Corralation between Phala Network and Alephium

Assuming the 90 days trading horizon Phala Network is expected to generate 7.2 times less return on investment than Alephium. But when comparing it to its historical volatility, Phala Network is 7.26 times less risky than Alephium. It trades about 0.2 of its potential returns per unit of risk. Alephium is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Alephium on October 10, 2024 and sell it today you would earn a total of  116.00  from holding Alephium or generate 9.223372036854776E16% return on investment over 90 days.

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

Phala Network  vs.  Alephium

Phala Network

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Phala Network are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Phala Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alephium

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alephium are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Alephium exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phala Network and Alephium

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

The idea behind Phala Network and Alephium 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.