Correlation Between Alephim and Compound Governance

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

Diversification Opportunities for Alephim and Compound Governance

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Alephim and Compound is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aleph.im and Compound Governance Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compound Governance Token and Alephim 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 Alephim are associated (or correlated) with Compound Governance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compound Governance Token has no effect on the direction of Alephim i.e., Alephim and Compound Governance go up and down completely randomly.

Pair Corralation between Alephim and Compound Governance

Assuming the 90 days trading horizon Alephim is expected to generate 1.15 times more return on investment than Compound Governance. However, Alephim is 1.15 times more volatile than Compound Governance Token. It trades about -0.03 of its potential returns per unit of risk. Compound Governance Token is currently generating about -0.12 per unit of risk. If you would invest  51.00  in Alephim on February 19, 2022 and sell it today you would lose (25.00)  from holding Alephim or give up 49.02% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.34%
ValuesDaily Returns

Aleph.im  vs.  Compound Governance Token

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

Alephim Price Channel

Compound Governance Token 
Compound Performance
0 of 100
Over the last 90 days Compound Governance Token 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 primary 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 Compound Governance Token investors.

Compound Price Channel

Alephim and Compound Governance Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alephim and Compound Governance

The main advantage of trading using opposite Alephim and Compound Governance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alephim position performs unexpectedly, Compound Governance 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 Compound Governance will offset losses from the drop in Compound Governance's long position.
The idea behind Alephim and Compound Governance Token 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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