Correlation Between Bluzelle and LEO Token

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

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

Diversification Opportunities for Bluzelle and LEO Token

0.64

Correlation Coefficient

Bluzelle  LEO Token

Poor diversification

The 3 months correlation between Bluzelle and LEO is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bluzelle and LEO Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEO Token and Bluzelle 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 Bluzelle are associated (or correlated) with LEO Token. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEO Token has no effect on the direction of Bluzelle i.e., Bluzelle and LEO Token go up and down completely randomly.

Pair Corralation between Bluzelle and LEO Token

Assuming the 90 days trading horizon Bluzelle is expected to generate 4.07 times more return on investment than LEO Token. However, Bluzelle is 4.07 times more volatile than LEO Token. It trades about 0.16 of its potential returns per unit of risk. LEO Token is currently generating about 0.1 per unit of risk. If you would invest  5.49  in Bluzelle on January 24, 2024 and sell it today you would earn a total of  33.51  from holding Bluzelle or generate 610.38% return on investment over 90 days.

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

Bluzelle  vs.  LEO Token

Bluzelle

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bluzelle are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Bluzelle exhibited solid returns over the last few months and may actually be approaching a breakup point.

LEO Token

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with Bluzelle and LEO Token

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

The idea behind Bluzelle and LEO 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.