Correlation Between Celestia and DF

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

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

Diversification Opportunities for Celestia and DF

-0.65

Correlation Coefficient

Celestia  DF

Excellent diversification

The 3 months correlation between Celestia and DF is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Celestia and DF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DF and Celestia 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 Celestia are associated (or correlated) with DF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DF has no effect on the direction of Celestia i.e., Celestia and DF go up and down completely randomly.

Pair Corralation between Celestia and DF

Assuming the 90 days trading horizon Celestia is expected to under-perform the DF. But the crypto coin apears to be less risky and, when comparing its historical volatility, Celestia is 2.8 times less risky than DF. The crypto coin trades about -0.02 of its potential returns per unit of risk. The DF is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3.56  in DF on December 26, 2024 and sell it today you would lose (1.36) from holding DF or give up 38.2% of portfolio value over 90 days.

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

Celestia  vs.  DF

Celestia

Risk-Adjusted Performance

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 latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Celestia shareholders.

DF

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, DF exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Celestia and DF

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

The idea behind Celestia and DF 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.