Correlation Between ARDR and Basic Attention

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

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

Diversification Opportunities for ARDR and Basic Attention

0.94

Correlation Coefficient

ARDR  Basic Attention

Almost no diversification

The 3 months correlation between ARDR and Basic is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ARDR and Basic Attention Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Attention Token and ARDR 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 ARDR are associated (or correlated) with Basic Attention. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Attention Token has no effect on the direction of ARDR i.e., ARDR and Basic Attention go up and down completely randomly.

Pair Corralation between ARDR and Basic Attention

Assuming the 90 days trading horizon ARDR is expected to generate 1.15 times more return on investment than Basic Attention. However, ARDR is 1.15 times more volatile than Basic Attention Token. It trades about -0.02 of its potential returns per unit of risk. Basic Attention Token is currently generating about -0.11 per unit of risk. If you would invest  11.00  in ARDR on January 19, 2024 and sell it today you would lose (1.00) from holding ARDR or give up 9.09% of portfolio value over 90 days.

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

ARDR  vs.  Basic Attention Token

ARDR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ARDR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ARDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Basic Attention Token

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Basic Attention Token are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Basic Attention exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ARDR and Basic Attention

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

The idea behind ARDR and Basic Attention Token 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.