Correlation Between Chia and DexCom

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

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

Diversification Opportunities for Chia and DexCom

0.75

Correlation Coefficient

Chia  DexCom

Poor diversification

The 3 months correlation between Chia and DexCom is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Chia and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc 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 DexCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DexCom Inc has no effect on the direction of Chia i.e., Chia and DexCom go up and down completely randomly.

Pair Corralation between Chia and DexCom

Assuming the 90 days trading horizon Chia is expected to under-perform the DexCom. In addition to that, Chia is 1.84 times more volatile than DexCom Inc. It trades about -0.02 of its total potential returns per unit of risk. DexCom Inc is currently generating about 0.0 per unit of volatility. If you would invest  10,686  in DexCom Inc on October 10, 2024 and sell it today you would lose (2,850) from holding DexCom Inc or give up 26.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	57.41%
Values	Daily Returns

Chia  vs.  DexCom Inc

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.

DexCom Inc

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with Chia and DexCom

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

The idea behind Chia and DexCom Inc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.