Correlation Between Chainlink and Alpha Finance

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

Diversification Opportunities for Chainlink and Alpha Finance

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Chainlink and Alpha is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and Alpha Finance Lab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Finance Lab and Chainlink 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 Chainlink are associated (or correlated) with Alpha Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Finance Lab has no effect on the direction of Chainlink i.e., Chainlink and Alpha Finance go up and down completely randomly.

Pair Corralation between Chainlink and Alpha Finance

Assuming the 90 days trading horizon Chainlink is expected to generate 0.79 times more return on investment than Alpha Finance. However, Chainlink is 1.26 times less risky than Alpha Finance. It trades about -0.07 of its potential returns per unit of risk. Alpha Finance Lab is currently generating about -0.07 per unit of risk. If you would invest  2,827  in Chainlink on May 9, 2022 and sell it today you would lose (2,041)  from holding Chainlink or give up 72.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Chainlink  vs.  Alpha Finance Lab

 Performance (%) 
       Timeline  
Chainlink 
Chainlink Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Chainlink are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chainlink may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Chainlink Price Channel

Alpha Finance Lab 
Alpha Performance
0 of 100
Over the last 90 days Alpha Finance Lab has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak technical indicators, Alpha Finance may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Alpha Price Channel

Chainlink and Alpha Finance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chainlink and Alpha Finance

The main advantage of trading using opposite Chainlink and Alpha Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chainlink position performs unexpectedly, Alpha Finance 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 Alpha Finance will offset losses from the drop in Alpha Finance's long position.
The idea behind Chainlink and Alpha Finance Lab 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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