Correlation Between Automata and Axie Infinity

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

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

Diversification Opportunities for Automata and Axie Infinity

0.62

Correlation Coefficient

Automata  Axie Infinity

Poor diversification

The 3 months correlation between Automata and Axie is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Automata and Axie Infinity Shards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axie Infinity Shards and Automata 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 Automata are associated (or correlated) with Axie Infinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axie Infinity Shards has no effect on the direction of Automata i.e., Automata and Axie Infinity go up and down completely randomly.

Pair Corralation between Automata and Axie Infinity

Assuming the 90 days trading horizon Automata is expected to generate 2.75 times more return on investment than Axie Infinity. However, Automata is 2.75 times more volatile than Axie Infinity Shards. It trades about 0.17 of its potential returns per unit of risk. Axie Infinity Shards is currently generating about -0.25 per unit of risk. If you would invest  18.00  in Automata on January 26, 2024 and sell it today you would earn a total of  7.00  from holding Automata or generate 38.89% return on investment over 90 days.

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

Automata  vs.  Axie Infinity Shards

Automata

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Automata are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Automata exhibited solid returns over the last few months and may actually be approaching a breakup point.

Axie Infinity Shards

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Automata and Axie Infinity

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

The idea behind Automata and Axie Infinity Shards 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.