Correlation Between Chia and Den Networks

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

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

Diversification Opportunities for Chia and Den Networks

-0.36

Correlation Coefficient

Chia  Den Networks

Very good diversification

The 3 months correlation between Chia and Den is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chia and Den Networks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Den Networks Limited 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 Den Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Den Networks Limited has no effect on the direction of Chia i.e., Chia and Den Networks go up and down completely randomly.

Pair Corralation between Chia and Den Networks

Assuming the 90 days trading horizon Chia is expected to generate 4.96 times more return on investment than Den Networks. However, Chia is 4.96 times more volatile than Den Networks Limited. It trades about 0.12 of its potential returns per unit of risk. Den Networks Limited is currently generating about -0.04 per unit of risk. If you would invest  1,504  in Chia on October 10, 2024 and sell it today you would earn a total of  641.00  from holding Chia or generate 42.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Chia  vs.  Den Networks Limited

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.

Den Networks Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Den Networks Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Chia and Den Networks

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

The idea behind Chia and Den Networks Limited 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.