Correlation Between Toncoin and NAS

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

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

Diversification Opportunities for Toncoin and NAS

-0.55

Correlation Coefficient

Toncoin  NAS

Excellent diversification

The 3 months correlation between Toncoin and NAS is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Toncoin and NAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAS 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 NAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAS has no effect on the direction of Toncoin i.e., Toncoin and NAS go up and down completely randomly.

Pair Corralation between Toncoin and NAS

Assuming the 90 days trading horizon Toncoin is expected to generate 63.18 times less return on investment than NAS. But when comparing it to its historical volatility, Toncoin is 32.11 times less risky than NAS. It trades about 0.06 of its potential returns per unit of risk. NAS is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.61  in NAS on September 12, 2024 and sell it today you would lose (0.20) from holding NAS or give up 32.77% of portfolio value over 90 days.

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

Toncoin  vs.  NAS

Toncoin

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Toncoin are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Toncoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

NAS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NAS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, NAS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toncoin and NAS

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

The idea behind Toncoin and NAS 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.