Correlation Between Chia and Aqr Small

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

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

Diversification Opportunities for Chia and Aqr Small

0.47

Correlation Coefficient

Chia  Aqr Small

Very weak diversification

The 3 months correlation between Chia and Aqr is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Chia and Aqr Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Small Cap 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 Aqr Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Small Cap has no effect on the direction of Chia i.e., Chia and Aqr Small go up and down completely randomly.

Pair Corralation between Chia and Aqr Small

Assuming the 90 days trading horizon Chia is expected to under-perform the Aqr Small. In addition to that, Chia is 5.42 times more volatile than Aqr Small Cap. It trades about -0.1 of its total potential returns per unit of risk. Aqr Small Cap is currently generating about -0.08 per unit of volatility. If you would invest  1,704  in Aqr Small Cap on December 18, 2024 and sell it today you would lose (102.00) from holding Aqr Small Cap or give up 5.99% of portfolio value over 90 days.

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

Chia  vs.  Aqr Small Cap

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.

Aqr Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aqr Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aqr Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chia and Aqr Small

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

The idea behind Chia and Aqr Small Cap 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.