Correlation Between Phala Network and Celestia

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

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

Diversification Opportunities for Phala Network and Celestia

-0.22

Correlation Coefficient

Phala Network  Celestia

Very good diversification

The 3 months correlation between Phala and Celestia is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Phala Network and Celestia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestia 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 Celestia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestia has no effect on the direction of Phala Network i.e., Phala Network and Celestia go up and down completely randomly.

Pair Corralation between Phala Network and Celestia

Assuming the 90 days trading horizon Phala Network is expected to generate 4.11 times more return on investment than Celestia. However, Phala Network is 4.11 times more volatile than Celestia. It trades about 0.07 of its potential returns per unit of risk. Celestia is currently generating about -0.06 per unit of risk. If you would invest  28.00  in Phala Network on October 25, 2024 and sell it today you would lose (3.00) from holding Phala Network or give up 10.71% of portfolio value over 90 days.

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

Phala Network  vs.  Celestia

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.

Celestia

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Phala Network and Celestia

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

The idea behind Phala Network and Celestia 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.