Correlation Between ApeCoin and Polkadot

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

Diversification Opportunities for ApeCoin and Polkadot

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between ApeCoin and Polkadot is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding ApeCoin and Polkadot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polkadot and ApeCoin 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 ApeCoin are associated (or correlated) with Polkadot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polkadot has no effect on the direction of ApeCoin i.e., ApeCoin and Polkadot go up and down completely randomly.

Pair Corralation between ApeCoin and Polkadot

Assuming the 90 days trading horizon ApeCoin is expected to generate 1.91 times more return on investment than Polkadot. However, ApeCoin is 1.91 times more volatile than Polkadot. It trades about 0.18 of its potential returns per unit of risk. Polkadot is currently generating about 0.02 per unit of risk. If you would invest  480.00  in ApeCoin on June 30, 2022 and sell it today you would earn a total of  86.00  from holding ApeCoin or generate 17.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

ApeCoin  vs.  Polkadot

 Performance (%) 
       Timeline  
ApeCoin 
ApeCoin Performance
0 of 100
Over the last 90 days ApeCoin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, ApeCoin sustained solid returns over the last few months and may actually be approaching a breakup point.
Polkadot 
Polkadot Performance
0 of 100
Over the last 90 days Polkadot 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 October 2022. The current disturbance may also be a sign of long term up-swing for Polkadot investors.

ApeCoin and Polkadot Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ApeCoin and Polkadot

The main advantage of trading using opposite ApeCoin and Polkadot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ApeCoin position performs unexpectedly, Polkadot 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 Polkadot will offset losses from the drop in Polkadot's long position.
The idea behind ApeCoin and Polkadot 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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