Correlation Between AERGO and BakeryToken

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

Diversification Opportunities for AERGO and BakeryToken

0.81
  Correlation Coefficient

Very poor diversification

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

Pair Corralation between AERGO and BakeryToken

Assuming the 90 days trading horizon AERGO is expected to generate 0.74 times more return on investment than BakeryToken. However, AERGO is 1.35 times less risky than BakeryToken. It trades about -0.02 of its potential returns per unit of risk. BakeryToken is currently generating about -0.08 per unit of risk. If you would invest  30.00  in AERGO on February 17, 2022 and sell it today you would lose (15.00)  from holding AERGO or give up 50.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

AERGO  vs.  BakeryToken

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

AERGO Price Channel

BakeryToken 
BakeryToken Performance
0 of 100
Over the last 90 days BakeryToken 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 forward-looking signals 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 BakeryToken investors.

BakeryToken Price Channel

AERGO and BakeryToken Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with AERGO and BakeryToken

The main advantage of trading using opposite AERGO and BakeryToken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AERGO position performs unexpectedly, BakeryToken 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 BakeryToken will offset losses from the drop in BakeryToken's long position.
The idea behind AERGO and BakeryToken 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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