Correlation Between Chia and XCHG Limited

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

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

Diversification Opportunities for Chia and XCHG Limited

-0.29

Correlation Coefficient

Chia  XCHG Limited

Very good diversification

The 3 months correlation between Chia and XCHG is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Chia and XCHG Limited American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XCHG Limited American 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 XCHG Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XCHG Limited American has no effect on the direction of Chia i.e., Chia and XCHG Limited go up and down completely randomly.

Pair Corralation between Chia and XCHG Limited

Assuming the 90 days trading horizon Chia is expected to generate 1.25 times more return on investment than XCHG Limited. However, Chia is 1.25 times more volatile than XCHG Limited American. It trades about -0.08 of its potential returns per unit of risk. XCHG Limited American is currently generating about -0.62 per unit of risk. If you would invest  2,262  in Chia on October 25, 2024 and sell it today you would lose (332.00) from holding Chia or give up 14.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Chia  vs.  XCHG Limited American

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.

XCHG Limited American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XCHG Limited American has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Chia and XCHG Limited

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

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