Correlation Between Chia and Value Fund

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

By analyzing existing cross correlation between Chia and Value Fund R6, you can compare the effects of market volatilities on Chia and Value Fund 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 Chia with a short position of Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and Value Fund.

Diversification Opportunities for Chia and Value Fund

-0.02

Correlation Coefficient

Chia  Value Fund

Good diversification

The 3 months correlation between Chia and Value is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Chia and Value Fund R6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund R6 and Chia 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 Chia are associated (or correlated) with Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund R6 has no effect on the direction of Chia i.e., Chia and Value Fund go up and down completely randomly.

Pair Corralation between Chia and Value Fund

Assuming the 90 days trading horizon Chia is expected to generate 7.93 times more return on investment than Value Fund. However, Chia is 7.93 times more volatile than Value Fund R6. It trades about 0.04 of its potential returns per unit of risk. Value Fund R6 is currently generating about -0.03 per unit of risk. If you would invest  1,862  in Chia on October 25, 2024 and sell it today you would earn a total of  68.00  from holding Chia or generate 3.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.06%
Values	Daily Returns

Chia  vs.  Value Fund R6

Chia

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chia are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Chia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Value Fund R6

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Value Fund R6 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Chia and Value Fund

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

The idea behind Chia and Value Fund R6 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.