Correlation Between Solana and BORA

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

Diversification Opportunities for Solana and BORA

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Solana and BORA is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Solana and BORA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORA 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 BORA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORA has no effect on the direction of Solana i.e., Solana and BORA go up and down completely randomly.

Pair Corralation between Solana and BORA

Assuming the 90 days trading horizon Solana is expected to generate 1.34 times more return on investment than BORA. However, Solana is 1.34 times more volatile than BORA. It trades about 0.18 of its potential returns per unit of risk. BORA is currently generating about 0.16 per unit of risk. If you would invest  3,008  in Solana on May 16, 2022 and sell it today you would earn a total of  1,645  from holding Solana or generate 54.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Solana  vs.  BORA

 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

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

BORA Price Channel

Solana and BORA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solana and BORA

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