Correlation Between Tokocrypto and DIA

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

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

Diversification Opportunities for Tokocrypto and DIA

0.78

Correlation Coefficient

Tokocrypto  DIA

Poor diversification

The 3 months correlation between Tokocrypto and DIA is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Tokocrypto and DIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIA and Tokocrypto 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 Tokocrypto are associated (or correlated) with DIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIA has no effect on the direction of Tokocrypto i.e., Tokocrypto and DIA go up and down completely randomly.

Pair Corralation between Tokocrypto and DIA

Assuming the 90 days trading horizon Tokocrypto is expected to generate 1.42 times more return on investment than DIA. However, Tokocrypto is 1.42 times more volatile than DIA. It trades about 0.02 of its potential returns per unit of risk. DIA is currently generating about -0.12 per unit of risk. If you would invest  39.00  in Tokocrypto on November 28, 2024 and sell it today you would lose (4.00) from holding Tokocrypto or give up 10.26% of portfolio value over 90 days.

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

Tokocrypto  vs.  DIA

Tokocrypto

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tokocrypto are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Tokocrypto may actually be approaching a critical reversion point that can send shares even higher in March 2025.

DIA

Risk-Adjusted Performance

Very Weak

Over the last 90 days DIA 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 basic 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 DIA shareholders.

Pair Trading with Tokocrypto and DIA

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

The idea behind Tokocrypto and DIA 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.