Correlation Between XRP and Alephim

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

Diversification Opportunities for XRP and Alephim

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between XRP and Alephim is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Aleph.im in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alephim and XRP 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 XRP are associated (or correlated) with Alephim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alephim has no effect on the direction of XRP i.e., XRP and Alephim go up and down completely randomly.

Pair Corralation between XRP and Alephim

Assuming the 90 days trading horizon XRP is expected to under-perform the Alephim. But the crypto coin apears to be less risky and, when comparing its historical volatility, XRP is 13.77 times less risky than Alephim. The crypto coin trades about -0.08 of its potential returns per unit of risk. The Alephim is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  51.00  in Alephim on March 29, 2022 and sell it today you would lose (25.00)  from holding Alephim or give up 49.02% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

XRP  vs.  Aleph.im

 Performance (%) 
      Timeline 
XRP 
XRP Performance
0 of 100
Over the last 90 days XRP 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 July 2022. The current disturbance may also be a sign of long term up-swing for XRP investors.

XRP Price Channel

Alephim 
Alephim Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Alephim are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alephim sustained solid returns over the last few months and may actually be approaching a breakup point.

Alephim Price Channel

XRP and Alephim Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with XRP and Alephim

The main advantage of trading using opposite XRP and Alephim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Alephim 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 Alephim will offset losses from the drop in Alephim's long position.
The idea behind XRP and Alephim 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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