Correlation Between Toncoin and XDC Network

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

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

Diversification Opportunities for Toncoin and XDC Network

0.58

Correlation Coefficient

Toncoin  XDC Network

Very weak diversification

The 3 months correlation between Toncoin and XDC is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Toncoin and XDC Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XDC Network 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 XDC Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XDC Network has no effect on the direction of Toncoin i.e., Toncoin and XDC Network go up and down completely randomly.

Pair Corralation between Toncoin and XDC Network

Assuming the 90 days trading horizon Toncoin is expected to under-perform the XDC Network. But the crypto coin apears to be less risky and, when comparing its historical volatility, Toncoin is 1.28 times less risky than XDC Network. The crypto coin trades about -0.09 of its potential returns per unit of risk. The XDC Network is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  7.03  in XDC Network on December 29, 2024 and sell it today you would lose (0.08) from holding XDC Network or give up 1.14% of portfolio value over 90 days.

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

Toncoin  vs.  XDC Network

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.

XDC Network

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XDC Network are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, XDC Network may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Toncoin and XDC Network

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

The idea behind Toncoin and XDC Network 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.