Correlation Between Binance Coin and SafePal

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

Diversification Opportunities for Binance Coin and SafePal

0.07
  Correlation Coefficient

Significant diversification

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

Pair Corralation between Binance Coin and SafePal

Assuming the 90 days trading horizon Binance Coin is expected to generate 8.98 times less return on investment than SafePal. But when comparing it to its historical volatility, Binance Coin is 3.3 times less risky than SafePal. It trades about 0.04 of its potential returns per unit of risk. SafePal is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  41.00  in SafePal on August 28, 2022 and sell it today you would earn a total of  7.00  from holding SafePal or generate 17.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Binance Coin  vs.  SafePal

 Performance (%) 
       Timeline  
Binance Coin 
Binance Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Binance Coin are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Binance Coin sustained solid returns over the last few months and may actually be approaching a breakup point.

Binance Price Channel

SafePal 
SafePal Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in SafePal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, SafePal sustained solid returns over the last few months and may actually be approaching a breakup point.

SafePal Price Channel

Binance Coin and SafePal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Binance Coin and SafePal

The main advantage of trading using opposite Binance Coin and SafePal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binance Coin position performs unexpectedly, SafePal 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 SafePal will offset losses from the drop in SafePal's long position.
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The idea behind Binance Coin and SafePal 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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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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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