Correlation Between DATA and Klaytn

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

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

Diversification Opportunities for DATA and Klaytn

0.77

Correlation Coefficient

DATA  Klaytn

Poor diversification

The 3 months correlation between DATA and Klaytn is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding DATA and Klaytn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klaytn and DATA 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 DATA 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 DATA i.e., DATA and Klaytn go up and down completely randomly.

Pair Corralation between DATA and Klaytn

Assuming the 90 days trading horizon DATA is expected to generate 1.15 times more return on investment than Klaytn. However, DATA is 1.15 times more volatile than Klaytn. It trades about 0.02 of its potential returns per unit of risk. Klaytn is currently generating about -0.03 per unit of risk. If you would invest  5.88  in DATA on February 10, 2024 and sell it today you would lose (0.40) from holding DATA or give up 6.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

DATA  vs.  Klaytn

DATA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DATA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, DATA may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Klaytn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Klaytn has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Klaytn shareholders.

Pair Trading with DATA and Klaytn

The main advantage of trading using opposite DATA and Klaytn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATA 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 DATA 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.