Correlation Between Auction and ApeCoin

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

Diversification Opportunities for Auction and ApeCoin

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Auction and ApeCoin is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Auction and ApeCoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ApeCoin and Auction 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 Auction are associated (or correlated) with ApeCoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ApeCoin has no effect on the direction of Auction i.e., Auction and ApeCoin go up and down completely randomly.

Pair Corralation between Auction and ApeCoin

Assuming the 90 days trading horizon Auction is expected to generate 0.79 times more return on investment than ApeCoin. However, Auction is 1.26 times less risky than ApeCoin. It trades about -0.01 of its potential returns per unit of risk. ApeCoin is currently generating about -0.06 per unit of risk. If you would invest  630.00  in Auction on April 1, 2022 and sell it today you would lose (59.00)  from holding Auction or give up 9.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Auction  vs.  ApeCoin

 Performance (%) 
      Timeline 
Auction 
Auction Performance
0 of 100
Over the last 90 days Auction 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 quite persistent which may send shares a bit higher in July 2022. The latest mess may also be a sign of long-standing up-swing for Auction institutional investors.

Auction Price Channel

ApeCoin 
ApeCoin Performance
0 of 100
Over the last 90 days ApeCoin 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 July 2022. The current disturbance may also be a sign of long term up-swing for ApeCoin investors.

ApeCoin Price Channel

Auction and ApeCoin Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Auction and ApeCoin

The main advantage of trading using opposite Auction and ApeCoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auction position performs unexpectedly, ApeCoin 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 ApeCoin will offset losses from the drop in ApeCoin's long position.
The idea behind Auction and ApeCoin 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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