Correlation Between Toncoin and Band Protocol

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

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

Diversification Opportunities for Toncoin and Band Protocol

0.92

Correlation Coefficient

Toncoin  Band Protocol

Almost no diversification

The 3 months correlation between Toncoin and Band is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Toncoin and Band Protocol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Band Protocol and Toncoin 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 Toncoin are associated (or correlated) with Band Protocol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Band Protocol has no effect on the direction of Toncoin i.e., Toncoin and Band Protocol go up and down completely randomly.

Pair Corralation between Toncoin and Band Protocol

Assuming the 90 days trading horizon Toncoin is expected to generate 0.86 times more return on investment than Band Protocol. However, Toncoin is 1.16 times less risky than Band Protocol. It trades about -0.1 of its potential returns per unit of risk. Band Protocol is currently generating about -0.15 per unit of risk. If you would invest  550.00  in Toncoin on December 30, 2024 and sell it today you would lose (181.00) from holding Toncoin or give up 32.91% of portfolio value over 90 days.

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

Toncoin  vs.  Band Protocol

Toncoin

Risk-Adjusted Performance

Very Weak

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

Band Protocol

Risk-Adjusted Performance

Very Weak

Over the last 90 days Band Protocol 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 Band Protocol shareholders.

Pair Trading with Toncoin and Band Protocol

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

The idea behind Toncoin and Band Protocol 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.