Correlation Between API3 and CEL
Can any of the company-specific risk be diversified away by investing in both API3 and CEL 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 API3 and CEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between API3 and CEL, you can compare the effects of market volatilities on API3 and CEL 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 API3 with a short position of CEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of API3 and CEL.
Diversification Opportunities for API3 and CEL
Very weak diversification
The 3 months correlation between API3 and CEL is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding API3 and CEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEL and API3 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 API3 are associated (or correlated) with CEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEL has no effect on the direction of API3 i.e., API3 and CEL go up and down completely randomly.
Pair Corralation between API3 and CEL
Assuming the 90 days trading horizon API3 is expected to under-perform the CEL. But the crypto coin apears to be less risky and, when comparing its historical volatility, API3 is 2.27 times less risky than CEL. The crypto coin trades about -0.32 of its potential returns per unit of risk. The CEL is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 24.00 in CEL on January 24, 2024 and sell it today you would lose (8.00) from holding CEL or give up 33.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
API3 vs. CEL
Performance |
Timeline |
API3 |
CEL |
API3 and CEL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with API3 and CEL
The main advantage of trading using opposite API3 and CEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if API3 position performs unexpectedly, CEL 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 CEL will offset losses from the drop in CEL's long position.The idea behind API3 and CEL 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |