Correlation Between Toncoin and NFPrompt

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

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

Diversification Opportunities for Toncoin and NFPrompt

0.89

Correlation Coefficient

Toncoin  NFPrompt

Very poor diversification

The 3 months correlation between Toncoin and NFPrompt is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Toncoin and NFPrompt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFPrompt 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 NFPrompt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFPrompt has no effect on the direction of Toncoin i.e., Toncoin and NFPrompt go up and down completely randomly.

Pair Corralation between Toncoin and NFPrompt

Assuming the 90 days trading horizon Toncoin is expected to generate 1.99 times less return on investment than NFPrompt. But when comparing it to its historical volatility, Toncoin is 1.54 times less risky than NFPrompt. It trades about 0.14 of its potential returns per unit of risk. NFPrompt is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  19.00  in NFPrompt on September 2, 2024 and sell it today you would earn a total of  17.00  from holding NFPrompt or generate 89.47% return on investment over 90 days.

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

Toncoin  vs.  NFPrompt

Toncoin

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Toncoin are ranked lower than 11 (%) 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.

NFPrompt

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NFPrompt are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, NFPrompt exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toncoin and NFPrompt

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

The idea behind Toncoin and NFPrompt 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.