Correlation Between Aave and SingularityNET

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Can any of the company-specific risk be diversified away by investing in both Aave and SingularityNET 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 Aave and SingularityNET into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aave and SingularityNET, you can compare the effects of market volatilities on Aave and SingularityNET 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 Aave with a short position of SingularityNET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aave and SingularityNET.

Diversification Opportunities for Aave and SingularityNET

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Aave and SingularityNET is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Aave and SingularityNET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SingularityNET and Aave 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 Aave are associated (or correlated) with SingularityNET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SingularityNET has no effect on the direction of Aave i.e., Aave and SingularityNET go up and down completely randomly.

Pair Corralation between Aave and SingularityNET

Assuming the 90 days trading horizon Aave is expected to under-perform the SingularityNET. But the crypto coin apears to be less risky and, when comparing its historical volatility, Aave is 2.28 times less risky than SingularityNET. The crypto coin trades about -0.07 of its potential returns per unit of risk. The SingularityNET is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.93  in SingularityNET on April 8, 2022 and sell it today you would earn a total of  2.02  from holding SingularityNET or generate 104.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy36.26%
ValuesDaily Returns

Aave  vs.  SingularityNET

 Performance (%) 
      Timeline 
Aave 
Aave Performance
0 of 100
Over the last 90 days Aave has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long term up-swing for Aave investors.

Aave Price Channel

SingularityNET 
SingularityNET Performance
0 of 100
Over the last 90 days SingularityNET has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long term up-swing for SingularityNET investors.

SingularityNET Price Channel

Aave and SingularityNET Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Aave and SingularityNET

The main advantage of trading using opposite Aave and SingularityNET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aave position performs unexpectedly, SingularityNET 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 SingularityNET will offset losses from the drop in SingularityNET's long position.
The idea behind Aave and SingularityNET 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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