Correlation Between BakeryToken and AERGO

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

Diversification Opportunities for BakeryToken and AERGO

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between BakeryToken and AERGO is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding BakeryToken and AERGO in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on AERGO and BakeryToken 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 BakeryToken are associated (or correlated) with AERGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AERGO has no effect on the direction of BakeryToken i.e., BakeryToken and AERGO go up and down completely randomly.

Pair Corralation between BakeryToken and AERGO

Assuming the 90 days trading horizon BakeryToken is expected to under-perform the AERGO. In addition to that, BakeryToken is 1.36 times more volatile than AERGO. It trades about -0.08 of its total potential returns per unit of risk. AERGO is currently generating about -0.03 per unit of volatility. If you would invest  30.00  in AERGO on February 16, 2022 and sell it today you would lose (16.00)  from holding AERGO or give up 53.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

BakeryToken  vs.  AERGO

 Performance (%) 
      Timeline 
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 weak performance in the last few months, the Crypto's forward-looking signals 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 BakeryToken investors.

BakeryToken Price Channel

AERGO 
AERGO Performance
0 of 100
Over the last 90 days AERGO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, AERGO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AERGO Price Channel

BakeryToken and AERGO Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with BakeryToken and AERGO

The main advantage of trading using opposite BakeryToken and AERGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BakeryToken position performs unexpectedly, AERGO 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 AERGO will offset losses from the drop in AERGO's long position.
The idea behind BakeryToken and AERGO 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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