Correlation Between ABBC Coin and Aragon

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

Diversification Opportunities for ABBC Coin and Aragon

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between ABBC Coin and Aragon is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ABBC Coin and Aragon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aragon and ABBC Coin 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 ABBC Coin are associated (or correlated) with Aragon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aragon has no effect on the direction of ABBC Coin i.e., ABBC Coin and Aragon go up and down completely randomly.

Pair Corralation between ABBC Coin and Aragon

Assuming the 90 days trading horizon ABBC Coin is expected to under-perform the Aragon. But the crypto coin apears to be less risky and, when comparing its historical volatility, ABBC Coin is 1.65 times less risky than Aragon. The crypto coin trades about -0.09 of its potential returns per unit of risk. The Aragon is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  508.00  in Aragon on February 23, 2022 and sell it today you would lose (295.00)  from holding Aragon or give up 58.07% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

ABBC Coin  vs.  Aragon

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

ABBC Coin Price Channel

Aragon 
Aragon Performance
0 of 100
Over the last 90 days Aragon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for Aragon investors.

Aragon Price Channel

ABBC Coin and Aragon Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with ABBC Coin and Aragon

The main advantage of trading using opposite ABBC Coin and Aragon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABBC Coin position performs unexpectedly, Aragon 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 Aragon will offset losses from the drop in Aragon's long position.
The idea behind ABBC Coin and Aragon 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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