Correlation Between Solana and ALEO

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

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

Diversification Opportunities for Solana and ALEO

0.52

Correlation Coefficient

Solana  ALEO

Very weak diversification

The 3 months correlation between Solana and ALEO is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Solana and ALEO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALEO and Solana 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 Solana are associated (or correlated) with ALEO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALEO has no effect on the direction of Solana i.e., Solana and ALEO go up and down completely randomly.

Pair Corralation between Solana and ALEO

Assuming the 90 days trading horizon Solana is expected to generate 0.79 times more return on investment than ALEO. However, Solana is 1.26 times less risky than ALEO. It trades about -0.08 of its potential returns per unit of risk. ALEO is currently generating about -0.22 per unit of risk. If you would invest  18,887  in Solana on December 30, 2024 and sell it today you would lose (6,508) from holding Solana or give up 34.46% of portfolio value over 90 days.

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

Solana  vs.  ALEO

Solana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solana has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Solana shareholders.

ALEO

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALEO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for ALEO shareholders.

Pair Trading with Solana and ALEO

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

The idea behind Solana and ALEO 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.