Correlation Between Phala Network and Graph

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

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

Diversification Opportunities for Phala Network and Graph

0.14

Correlation Coefficient

Phala Network  Graph

Average diversification

The 3 months correlation between Phala and Graph is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Phala Network and The Graph in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graph 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 Graph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graph has no effect on the direction of Phala Network i.e., Phala Network and Graph go up and down completely randomly.

Pair Corralation between Phala Network and Graph

Assuming the 90 days trading horizon Phala Network is expected to generate 1.89 times more return on investment than Graph. However, Phala Network is 1.89 times more volatile than The Graph. It trades about 0.06 of its potential returns per unit of risk. The Graph is currently generating about -0.02 per unit of risk. If you would invest  19.00  in Phala Network on October 25, 2024 and sell it today you would earn a total of  6.00  from holding Phala Network or generate 31.58% 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.  The Graph

Phala Network

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Phala Network are ranked lower than 11 (%) 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.

Graph

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Graph are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Graph exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phala Network and Graph

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

The idea behind Phala Network and The Graph 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.