Correlation Between API3 and Automata

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Can any of the company-specific risk be diversified away by investing in both API3 and Automata 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 API3 and Automata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between API3 and Automata, you can compare the effects of market volatilities on API3 and Automata 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 API3 with a short position of Automata. Check out your portfolio center. Please also check ongoing floating volatility patterns of API3 and Automata.

Diversification Opportunities for API3 and Automata

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between API3 and Automata is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding API3 and Automata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automata and API3 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 API3 are associated (or correlated) with Automata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automata has no effect on the direction of API3 i.e., API3 and Automata go up and down completely randomly.

Pair Corralation between API3 and Automata

Assuming the 90 days trading horizon API3 is expected to generate 1.01 times less return on investment than Automata. But when comparing it to its historical volatility, API3 is 1.29 times less risky than Automata. It trades about 0.1 of its potential returns per unit of risk. Automata is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Automata on April 1, 2022 and sell it today you would earn a total of  1.00  from holding Automata or generate 6.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

API3  vs.  Automata

 Performance (%) 
      Timeline 
API3 
API3 Performance
0 of 100
Over the last 90 days API3 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 forward indicators remain somewhat strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for API3 investors.

API3 Price Channel

Automata 
Automata Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Automata are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Automata sustained solid returns over the last few months and may actually be approaching a breakup point.

Automata Price Channel

API3 and Automata Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with API3 and Automata

The main advantage of trading using opposite API3 and Automata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if API3 position performs unexpectedly, Automata 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 Automata will offset losses from the drop in Automata's long position.
The idea behind API3 and Automata 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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