Correlation Between Algorand and Ankr Network

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

By analyzing existing cross correlation between Algorand and Ankr Network, you can compare the effects of market volatilities on Algorand and Ankr Network 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 Ankr Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algorand and Ankr Network.

Diversification Opportunities for Algorand and Ankr Network

0.83

Correlation Coefficient

Algorand  Ankr Network

Very poor diversification

The 3 months correlation between Algorand and Ankr is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and Ankr Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ankr Network 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 Ankr Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ankr Network has no effect on the direction of Algorand i.e., Algorand and Ankr Network go up and down completely randomly.

Pair Corralation between Algorand and Ankr Network

Assuming the 90 days trading horizon Algorand is expected to under-perform the Ankr Network. But the crypto coin apears to be less risky and, when comparing its historical volatility, Algorand is 1.52 times less risky than Ankr Network. The crypto coin trades about -0.18 of its potential returns per unit of risk. The Ankr Network is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4.12  in Ankr Network on January 18, 2024 and sell it today you would earn a total of  0.11  from holding Ankr Network or generate 2.67% return on investment over 90 days.

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

Algorand  vs.  Ankr Network

Algorand

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Algorand are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Algorand may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Ankr Network

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ankr Network are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Ankr Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Algorand and Ankr Network

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

The idea behind Algorand and Ankr Network 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.