Correlation Between ApeCoin and CHESS

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

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

Diversification Opportunities for ApeCoin and CHESS

0.8

Correlation Coefficient

ApeCoin  CHESS

Very poor diversification

The 3 months correlation between ApeCoin and CHESS is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ApeCoin and CHESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHESS and ApeCoin 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 ApeCoin 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 ApeCoin i.e., ApeCoin and CHESS go up and down completely randomly.

Pair Corralation between ApeCoin and CHESS

Assuming the 90 days trading horizon ApeCoin is expected to under-perform the CHESS. But the crypto coin apears to be less risky and, when comparing its historical volatility, ApeCoin is 1.19 times less risky than CHESS. The crypto coin trades about -0.3 of its potential returns per unit of risk. The CHESS is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  31.00  in CHESS on January 26, 2024 and sell it today you would lose (10.00) from holding CHESS or give up 32.26% of portfolio value over 90 days.

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

ApeCoin  vs.  CHESS

ApeCoin

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 ApeCoin and CHESS

The main advantage of trading using opposite ApeCoin and CHESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ApeCoin 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 ApeCoin 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.