Correlation Between Solana and Basic Attention

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

Diversification Opportunities for Solana and Basic Attention

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Solana and Basic is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Solana and Basic Attention Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Attention Token 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 Basic Attention. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Attention Token has no effect on the direction of Solana i.e., Solana and Basic Attention go up and down completely randomly.

Pair Corralation between Solana and Basic Attention

Assuming the 90 days trading horizon Solana is expected to under-perform the Basic Attention. In addition to that, Solana is 1.64 times more volatile than Basic Attention Token. It trades about -0.02 of its total potential returns per unit of risk. Basic Attention Token is currently generating about 0.24 per unit of volatility. If you would invest  40.00  in Basic Attention Token on May 21, 2022 and sell it today you would earn a total of  6.00  from holding Basic Attention Token or generate 15.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy86.36%
ValuesDaily Returns

Solana  vs.  Basic Attention Token

 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

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

Basic Price Channel

Solana and Basic Attention Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solana and Basic Attention

The main advantage of trading using opposite Solana and Basic Attention positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana position performs unexpectedly, Basic Attention 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 Basic Attention will offset losses from the drop in Basic Attention's long position.
The idea behind Solana and Basic Attention Token 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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