Correlation Between Alephim and Chroma

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

Diversification Opportunities for Alephim and Chroma

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Alephim and Chroma is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aleph.im and Chroma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chroma and Alephim 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 Alephim are associated (or correlated) with Chroma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chroma has no effect on the direction of Alephim i.e., Alephim and Chroma go up and down completely randomly.

Pair Corralation between Alephim and Chroma

Assuming the 90 days trading horizon Alephim is expected to generate 25.81 times more return on investment than Chroma. However, Alephim is 25.81 times more volatile than Chroma. It trades about 0.19 of its potential returns per unit of risk. Chroma is currently generating about -0.09 per unit of risk. If you would invest  26.00  in Alephim on April 8, 2022 and sell it today you would earn a total of  0.00  from holding Alephim or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Aleph.im  vs.  Chroma

 Performance (%) 
      Timeline 
Alephim 
Alephim Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Alephim are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alephim sustained solid returns over the last few months and may actually be approaching a breakup point.

Alephim Price Channel

Chroma 
Chroma Performance
0 of 100
Over the last 90 days Chroma 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 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 Chroma investors.

Chroma Price Channel

Alephim and Chroma Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alephim and Chroma

The main advantage of trading using opposite Alephim and Chroma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alephim position performs unexpectedly, Chroma 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 Chroma will offset losses from the drop in Chroma's long position.
The idea behind Alephim and Chroma 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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