Correlation Between Solana and Internet Computer

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

Diversification Opportunities for Solana and Internet Computer

0.84
  Correlation Coefficient

Very poor diversification

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

Pair Corralation between Solana and Internet Computer

Assuming the 90 days trading horizon Solana is expected to generate 1.39 times less return on investment than Internet Computer. In addition to that, Solana is 1.27 times more volatile than Internet Computer. It trades about 0.09 of its total potential returns per unit of risk. Internet Computer is currently generating about 0.16 per unit of volatility. If you would invest  597.00  in Internet Computer on May 11, 2022 and sell it today you would earn a total of  232.00  from holding Internet Computer or generate 38.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Solana  vs.  Internet Computer

 Performance (%) 
       Timeline  
Solana 
Solana Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Solana are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Solana may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Solana Price Channel

Internet Computer 
Internet Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Internet Computer are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Internet Computer sustained solid returns over the last few months and may actually be approaching a breakup point.

Internet Price Channel

Solana and Internet Computer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solana and Internet Computer

The main advantage of trading using opposite Solana and Internet Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana position performs unexpectedly, Internet Computer 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 Internet Computer will offset losses from the drop in Internet Computer's long position.
The idea behind Solana and Internet Computer 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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