Correlation Between Solana and API3

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

Diversification Opportunities for Solana and API3

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Solana and API3 is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Solana and API3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on API3 and Solana 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 Solana are associated (or correlated) with API3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of API3 has no effect on the direction of Solana i.e., Solana and API3 go up and down completely randomly.

Pair Corralation between Solana and API3

Assuming the 90 days trading horizon Solana is expected to generate 1.59 times less return on investment than API3. But when comparing it to its historical volatility, Solana is 1.04 times less risky than API3. It trades about 0.15 of its potential returns per unit of risk. API3 is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  184.00  in API3 on May 16, 2022 and sell it today you would earn a total of  58.00  from holding API3 or generate 31.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Solana  vs.  API3

 Performance (%) 
       Timeline  
Solana 
Solana Performance
0 of 100
Over the last 90 days Solana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Solana is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Solana Price Channel

API3 
API3 Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in API3 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, API3 sustained solid returns over the last few months and may actually be approaching a breakup point.

API3 Price Channel

Solana and API3 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solana and API3

The main advantage of trading using opposite Solana and API3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana position performs unexpectedly, API3 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 API3 will offset losses from the drop in API3's long position.
The idea behind Solana and API3 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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