Correlation Between Solana and COCOS BCX

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

Diversification Opportunities for Solana and COCOS BCX

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Solana and COCOS is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Solana and COCOS BCX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCOS BCX 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 COCOS BCX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCOS BCX has no effect on the direction of Solana i.e., Solana and COCOS BCX go up and down completely randomly.

Pair Corralation between Solana and COCOS BCX

Assuming the 90 days trading horizon Solana is expected to generate 157.39 times less return on investment than COCOS BCX. But when comparing it to its historical volatility, Solana is 70.58 times less risky than COCOS BCX. It trades about 0.19 of its potential returns per unit of risk. COCOS BCX is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  69.00  in COCOS BCX on May 12, 2022 and sell it today you would earn a total of  11.00  from holding COCOS BCX or generate 15.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy90.91%
ValuesDaily Returns

Solana  vs.  COCOS BCX

 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

COCOS BCX 
COCOS Performance
32 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in COCOS BCX are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, COCOS BCX sustained solid returns over the last few months and may actually be approaching a breakup point.

COCOS Price Channel

Solana and COCOS BCX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solana and COCOS BCX

The main advantage of trading using opposite Solana and COCOS BCX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana position performs unexpectedly, COCOS BCX 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 COCOS BCX will offset losses from the drop in COCOS BCX's long position.
The idea behind Solana and COCOS BCX 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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