Correlation Between Solana and Chiliz

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

Diversification Opportunities for Solana and Chiliz

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Solana and Chiliz is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Solana and Chiliz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiliz 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 Chiliz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiliz has no effect on the direction of Solana i.e., Solana and Chiliz go up and down completely randomly.

Pair Corralation between Solana and Chiliz

Assuming the 90 days trading horizon Solana is expected to under-perform the Chiliz. In addition to that, Solana is 1.02 times more volatile than Chiliz. It trades about -0.1 of its total potential returns per unit of risk. Chiliz is currently generating about -0.07 per unit of volatility. If you would invest  56.00  in Chiliz on May 10, 2022 and sell it today you would lose (41.00)  from holding Chiliz or give up 73.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Solana  vs.  Chiliz

 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

Chiliz 
Chiliz Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Chiliz are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Chiliz sustained solid returns over the last few months and may actually be approaching a breakup point.

Chiliz Price Channel

Solana and Chiliz Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solana and Chiliz

The main advantage of trading using opposite Solana and Chiliz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana position performs unexpectedly, Chiliz 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 Chiliz will offset losses from the drop in Chiliz's long position.
The idea behind Solana and Chiliz 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 Price Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

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