Correlation Between Solana and SKALE Network

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

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

Diversification Opportunities for Solana and SKALE Network

0.58

Correlation Coefficient

Solana  SKALE Network

Very weak diversification

The 3 months correlation between Solana and SKALE is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Solana and SKALE Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKALE Network 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 SKALE Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKALE Network has no effect on the direction of Solana i.e., Solana and SKALE Network go up and down completely randomly.

Pair Corralation between Solana and SKALE Network

Assuming the 90 days trading horizon Solana is expected to generate 0.77 times more return on investment than SKALE Network. However, Solana is 1.29 times less risky than SKALE Network. It trades about -0.11 of its potential returns per unit of risk. SKALE Network is currently generating about -0.13 per unit of risk. If you would invest  23,763  in Solana on November 27, 2024 and sell it today you would lose (9,658) from holding Solana or give up 40.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Solana  vs.  SKALE Network

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 March 2025. The latest tumult may also be a sign of longer-term up-swing for Solana shareholders.

SKALE Network

Risk-Adjusted Performance

Very Weak

Over the last 90 days SKALE Network 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 March 2025. The latest tumult may also be a sign of longer-term up-swing for SKALE Network shareholders.

Pair Trading with Solana and SKALE Network

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

The idea behind Solana and SKALE Network 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.