Correlation Between Alchemix and Cosmos

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

Diversification Opportunities for Alchemix and Cosmos

0.81
  Correlation Coefficient

Very poor diversification

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

Pair Corralation between Alchemix and Cosmos

Assuming the 90 days trading horizon Alchemix is expected to under-perform the Cosmos. In addition to that, Alchemix is 1.02 times more volatile than Cosmos. It trades about -0.45 of its total potential returns per unit of risk. Cosmos is currently generating about -0.44 per unit of volatility. If you would invest  2,467  in Cosmos on February 16, 2022 and sell it today you would lose (1,391)  from holding Cosmos or give up 56.38% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Alchemix  vs.  Cosmos

 Performance (%) 
      Timeline 
Alchemix 
Alchemix Performance
0 of 100
Over the last 90 days Alchemix 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 fundamental 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 Alchemix investors.

Alchemix Price Channel

Cosmos 
Cosmos Performance
0 of 100
Over the last 90 days Cosmos 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 Cosmos investors.

Cosmos Price Channel

Alchemix and Cosmos Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alchemix and Cosmos

The main advantage of trading using opposite Alchemix and Cosmos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alchemix position performs unexpectedly, Cosmos 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 Cosmos will offset losses from the drop in Cosmos' long position.
The idea behind Alchemix and Cosmos 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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