Correlation Between AERGO and BeefyFinance

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

Diversification Opportunities for AERGO and BeefyFinance

-0.05
  Correlation Coefficient

Good diversification

The 3 months correlation between AERGO and BeefyFinance is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding AERGO and Beefy.Finance in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on BeefyFinance 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 BeefyFinance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BeefyFinance has no effect on the direction of AERGO i.e., AERGO and BeefyFinance go up and down completely randomly.

Pair Corralation between AERGO and BeefyFinance

Assuming the 90 days trading horizon AERGO is expected to generate 0.79 times more return on investment than BeefyFinance. However, AERGO is 1.26 times less risky than BeefyFinance. It trades about -0.22 of its potential returns per unit of risk. BeefyFinance is currently generating about -0.43 per unit of risk. If you would invest  24.00  in AERGO on February 16, 2022 and sell it today you would lose (10.00)  from holding AERGO or give up 41.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

AERGO  vs.  Beefy.Finance

 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

BeefyFinance 
BeefyFinance Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BeefyFinance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, BeefyFinance sustained solid returns over the last few months and may actually be approaching a breakup point.

BeefyFinance Price Channel

AERGO and BeefyFinance Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with AERGO and BeefyFinance

The main advantage of trading using opposite AERGO and BeefyFinance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AERGO position performs unexpectedly, BeefyFinance 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 BeefyFinance will offset losses from the drop in BeefyFinance's long position.
The idea behind AERGO and BeefyFinance 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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