Correlation Between ADX and Alchemy Pay

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

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

Diversification Opportunities for ADX and Alchemy Pay

0.82

Correlation Coefficient

ADX  Alchemy Pay

Very poor diversification

The 3 months correlation between ADX and Alchemy is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ADX and Alchemy Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alchemy Pay and ADX 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 ADX are associated (or correlated) with Alchemy Pay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alchemy Pay has no effect on the direction of ADX i.e., ADX and Alchemy Pay go up and down completely randomly.

Pair Corralation between ADX and Alchemy Pay

Assuming the 90 days trading horizon ADX is expected to generate 2.46 times less return on investment than Alchemy Pay. But when comparing it to its historical volatility, ADX is 1.5 times less risky than Alchemy Pay. It trades about 0.09 of its potential returns per unit of risk. Alchemy Pay is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1.84  in Alchemy Pay on January 25, 2024 and sell it today you would earn a total of  1.60  from holding Alchemy Pay or generate 86.96% return on investment over 90 days.

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

ADX  vs.  Alchemy Pay

ADX

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADX are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, ADX exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alchemy Pay

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alchemy Pay are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Alchemy Pay exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADX and Alchemy Pay

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

The idea behind ADX and Alchemy Pay 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.