Correlation Between Alpha Finance and Anchor Protocol

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

Diversification Opportunities for Alpha Finance and Anchor Protocol

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Alpha and Anchor is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Finance Lab and Anchor Protocol in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Anchor Protocol and Alpha Finance 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 Alpha Finance Lab are associated (or correlated) with Anchor Protocol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anchor Protocol has no effect on the direction of Alpha Finance i.e., Alpha Finance and Anchor Protocol go up and down completely randomly.

Pair Corralation between Alpha Finance and Anchor Protocol

Assuming the 90 days trading horizon Alpha Finance Lab is expected to under-perform the Anchor Protocol. But the crypto coin apears to be less risky and, when comparing its historical volatility, Alpha Finance Lab is 5.31 times less risky than Anchor Protocol. The crypto coin trades about -0.4 of its potential returns per unit of risk. The Anchor Protocol is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  215.00  in Anchor Protocol on February 16, 2022 and sell it today you would lose (189.00)  from holding Anchor Protocol or give up 87.91% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Alpha Finance Lab  vs.  Anchor Protocol

 Performance (%) 
      Timeline 
Alpha Finance Lab 
Alpha Performance
0 of 100
Over the last 90 days Alpha Finance Lab 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 technical 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 Alpha Finance Lab investors.

Alpha Price Channel

Anchor Protocol 
Anchor Performance
0 of 100
Over the last 90 days Anchor Protocol has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Anchor Protocol sustained solid returns over the last few months and may actually be approaching a breakup point.

Anchor Price Channel

Alpha Finance and Anchor Protocol Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alpha Finance and Anchor Protocol

The main advantage of trading using opposite Alpha Finance and Anchor Protocol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Finance position performs unexpectedly, Anchor Protocol 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 Anchor Protocol will offset losses from the drop in Anchor Protocol's long position.
The idea behind Alpha Finance Lab and Anchor Protocol 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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