Correlation Between XRP and Biconomy

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

Diversification Opportunities for XRP and Biconomy

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between XRP and Biconomy is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Biconomy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biconomy and XRP 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 XRP are associated (or correlated) with Biconomy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biconomy has no effect on the direction of XRP i.e., XRP and Biconomy go up and down completely randomly.

Pair Corralation between XRP and Biconomy

Assuming the 90 days trading horizon XRP is expected to generate 1.48 times less return on investment than Biconomy. But when comparing it to its historical volatility, XRP is 1.36 times less risky than Biconomy. It trades about 0.08 of its potential returns per unit of risk. Biconomy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  55.00  in Biconomy on May 15, 2022 and sell it today you would earn a total of  9.00  from holding Biconomy or generate 16.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

XRP  vs.  Biconomy

 Performance (%) 
       Timeline  
XRP 
XRP Performance
0 of 100
Over the last 90 days XRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Crypto's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for XRP investors.

XRP Price Channel

Biconomy 
Biconomy Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Biconomy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Biconomy sustained solid returns over the last few months and may actually be approaching a breakup point.

Biconomy Price Channel

XRP and Biconomy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with XRP and Biconomy

The main advantage of trading using opposite XRP and Biconomy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Biconomy 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 Biconomy will offset losses from the drop in Biconomy's long position.
The idea behind XRP and Biconomy 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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