Correlation Between Algorand and BEZ

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

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

Diversification Opportunities for Algorand and BEZ

-0.13

Correlation Coefficient

Algorand  BEZ

Good diversification

The 3 months correlation between Algorand and BEZ is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and BEZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEZ 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 BEZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEZ has no effect on the direction of Algorand i.e., Algorand and BEZ go up and down completely randomly.

Pair Corralation between Algorand and BEZ

Assuming the 90 days trading horizon Algorand is expected to under-perform the BEZ. But the crypto coin apears to be less risky and, when comparing its historical volatility, Algorand is 9.28 times less risky than BEZ. The crypto coin trades about -0.02 of its potential returns per unit of risk. The BEZ is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.66  in BEZ on January 17, 2024 and sell it today you would earn a total of  23.34  from holding BEZ or generate 3516.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.12%
Values	Daily Returns

Algorand  vs.  BEZ

Algorand

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Algorand are ranked lower than 1 (%) 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.

BEZ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BEZ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BEZ is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Algorand and BEZ

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

The idea behind Algorand and BEZ 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.