Correlation Between Audius and BakeryToken

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

Diversification Opportunities for Audius and BakeryToken

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Audius and BakeryToken is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Audius and BakeryToken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BakeryToken and Audius 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 Audius are associated (or correlated) with BakeryToken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BakeryToken has no effect on the direction of Audius i.e., Audius and BakeryToken go up and down completely randomly.

Pair Corralation between Audius and BakeryToken

Assuming the 90 days trading horizon Audius is expected to generate 0.86 times more return on investment than BakeryToken. However, Audius is 1.17 times less risky than BakeryToken. It trades about -0.06 of its potential returns per unit of risk. BakeryToken is currently generating about -0.07 per unit of risk. If you would invest  198.00  in Audius on February 21, 2022 and sell it today you would lose (153.00)  from holding Audius or give up 77.27% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Audius  vs.  BakeryToken

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

Audius Price Channel

BakeryToken 
BakeryToken Performance
0 of 100
Over the last 90 days BakeryToken has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Crypto's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BakeryToken investors.

BakeryToken Price Channel

Audius and BakeryToken Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Audius and BakeryToken

The main advantage of trading using opposite Audius and BakeryToken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Audius position performs unexpectedly, BakeryToken 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 BakeryToken will offset losses from the drop in BakeryToken's long position.
The idea behind Audius and BakeryToken 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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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