Correlation Between Tezos and Aelf

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

By analyzing existing cross correlation between Tezos and aelf, you can compare the effects of market volatilities on Tezos and Aelf 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 Tezos with a short position of Aelf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tezos and Aelf.

Diversification Opportunities for Tezos and Aelf

0.94

Correlation Coefficient

Tezos  Aelf

Almost no diversification

The 3 months correlation between Tezos and Aelf is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Tezos and aelf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on aelf and Tezos 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 Tezos are associated (or correlated) with Aelf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of aelf has no effect on the direction of Tezos i.e., Tezos and Aelf go up and down completely randomly.

Pair Corralation between Tezos and Aelf

Assuming the 90 days trading horizon Tezos is expected to generate 1.29 times more return on investment than Aelf. However, Tezos is 1.29 times more volatile than aelf. It trades about 0.13 of its potential returns per unit of risk. aelf is currently generating about -0.11 per unit of risk. If you would invest  120.00  in Tezos on September 25, 2024 and sell it today you would earn a total of  22.00  from holding Tezos or generate 18.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Tezos  vs.  aelf

Tezos

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tezos are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Tezos exhibited solid returns over the last few months and may actually be approaching a breakup point.

aelf

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in aelf are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Aelf exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tezos and Aelf

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

The idea behind Tezos and aelf 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.