Correlation Between Chia and Northern Data

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

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

Diversification Opportunities for Chia and Northern Data

0.54

Correlation Coefficient

Chia  Northern Data

Very weak diversification

The 3 months correlation between Chia and Northern is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chia and Northern Data AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Data AG 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 Northern Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Data AG has no effect on the direction of Chia i.e., Chia and Northern Data go up and down completely randomly.

Pair Corralation between Chia and Northern Data

Assuming the 90 days trading horizon Chia is expected to under-perform the Northern Data. In addition to that, Chia is 1.6 times more volatile than Northern Data AG. It trades about -0.12 of its total potential returns per unit of risk. Northern Data AG is currently generating about -0.17 per unit of volatility. If you would invest  4,180  in Northern Data AG on December 21, 2024 and sell it today you would lose (1,500) from holding Northern Data AG or give up 35.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Chia  vs.  Northern Data AG

Chia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chia 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 technical 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 Chia shareholders.

Northern Data AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northern Data AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Chia and Northern Data

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

The idea behind Chia and Northern Data AG 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.