Correlation Between Chia and FACT II

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

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

Diversification Opportunities for Chia and FACT II

-0.02

Correlation Coefficient

Chia  FACT II

Good diversification

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

Pair Corralation between Chia and FACT II

Assuming the 90 days trading horizon Chia is expected to under-perform the FACT II. But the crypto coin apears to be less risky and, when comparing its historical volatility, Chia is 1.19 times less risky than FACT II. The crypto coin trades about -0.08 of its potential returns per unit of risk. The FACT II Acquisition is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  17.00  in FACT II Acquisition on October 25, 2024 and sell it today you would earn a total of  1.00  from holding FACT II Acquisition or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.86%
Values	Daily Returns

Chia  vs.  FACT II Acquisition

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.

FACT II Acquisition

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days FACT II Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly inconsistent basic indicators, FACT II showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chia and FACT II

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

The idea behind Chia and FACT II Acquisition 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.