Correlation Between 1inch and CHESS

Can any of the company-specific risk be diversified away by investing in both 1inch and CHESS 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 1inch and CHESS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1inch and CHESS, you can compare the effects of market volatilities on 1inch and CHESS 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 1inch with a short position of CHESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1inch and CHESS.

Diversification Opportunities for 1inch and CHESS

0.93

Correlation Coefficient

1inch  CHESS

Almost no diversification

The 3 months correlation between 1inch and CHESS is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding 1inch and CHESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHESS and 1inch 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 1inch are associated (or correlated) with CHESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHESS has no effect on the direction of 1inch i.e., 1inch and CHESS go up and down completely randomly.

Pair Corralation between 1inch and CHESS

Assuming the 90 days trading horizon 1inch is expected to generate 1.03 times less return on investment than CHESS. But when comparing it to its historical volatility, 1inch is 1.08 times less risky than CHESS. It trades about 0.02 of its potential returns per unit of risk. CHESS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  23.00  in CHESS on January 26, 2024 and sell it today you would lose (2.00) from holding CHESS or give up 8.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

1inch  vs.  CHESS

1inch

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 1inch are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, 1inch exhibited solid returns over the last few months and may actually be approaching a breakup point.

CHESS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CHESS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, CHESS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 1inch and CHESS

The main advantage of trading using opposite 1inch and CHESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1inch position performs unexpectedly, CHESS 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 CHESS will offset losses from the drop in CHESS's long position.

The idea behind 1inch and CHESS 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.