Correlation Between Algorand and THR
Can any of the company-specific risk be diversified away by investing in both Algorand and THR 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 Algorand and THR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algorand and THR, you can compare the effects of market volatilities on Algorand and THR 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 Algorand with a short position of THR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algorand and THR.
Diversification Opportunities for Algorand and THR
Average diversification
The 3 months correlation between Algorand and THR is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and THR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THR and Algorand 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 Algorand are associated (or correlated) with THR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THR has no effect on the direction of Algorand i.e., Algorand and THR go up and down completely randomly.
Pair Corralation between Algorand and THR
Assuming the 90 days trading horizon Algorand is expected to generate 24.68 times less return on investment than THR. But when comparing it to its historical volatility, Algorand is 11.15 times less risky than THR. It trades about 0.04 of its potential returns per unit of risk. THR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 148,800 in THR on December 30, 2023 and sell it today you would earn a total of 900,915 from holding THR or generate 605.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 49.03% |
Values | Daily Returns |
Algorand vs. THR
Performance |
Timeline |
Algorand |
THR |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Algorand and THR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Algorand and THR
The main advantage of trading using opposite Algorand and THR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algorand position performs unexpectedly, THR 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 THR will offset losses from the drop in THR's long position.The idea behind Algorand and THR 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 the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |