Correlation Between ARPA Chain and Klaytn

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Can any of the company-specific risk be diversified away by investing in both ARPA Chain and Klaytn 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 ARPA Chain and Klaytn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARPA Chain and Klaytn, you can compare the effects of market volatilities on ARPA Chain and Klaytn 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 ARPA Chain with a short position of Klaytn. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARPA Chain and Klaytn.

Diversification Opportunities for ARPA Chain and Klaytn

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between ARPA and Klaytn is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ARPA Chain and Klaytn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klaytn and ARPA Chain 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 ARPA Chain are associated (or correlated) with Klaytn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klaytn has no effect on the direction of ARPA Chain i.e., ARPA Chain and Klaytn go up and down completely randomly.

Pair Corralation between ARPA Chain and Klaytn

Assuming the 90 days trading horizon ARPA Chain is expected to generate 1.5 times more return on investment than Klaytn. However, ARPA Chain is 1.5 times more volatile than Klaytn. It trades about 0.15 of its potential returns per unit of risk. Klaytn is currently generating about 0.08 per unit of risk. If you would invest  6.88  in ARPA Chain on December 29, 2023 and sell it today you would earn a total of  1.99  from holding ARPA Chain or generate 28.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

ARPA Chain  vs.  Klaytn

 Performance 
       Timeline  
ARPA Chain 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ARPA Chain are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ARPA Chain exhibited solid returns over the last few months and may actually be approaching a breakup point.
Klaytn 

Risk-Adjusted Performance

4 of 100

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

ARPA Chain and Klaytn Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ARPA Chain and Klaytn

The main advantage of trading using opposite ARPA Chain and Klaytn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARPA Chain position performs unexpectedly, Klaytn 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 Klaytn will offset losses from the drop in Klaytn's long position.
The idea behind ARPA Chain and Klaytn 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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