Correlation Between Polkadot and SEELE

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

Diversification Opportunities for Polkadot and SEELE

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Polkadot and SEELE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Polkadot and SEELE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEELE and Polkadot 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 Polkadot are associated (or correlated) with SEELE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEELE has no effect on the direction of Polkadot i.e., Polkadot and SEELE go up and down completely randomly.

Pair Corralation between Polkadot and SEELE

Assuming the 90 days trading horizon Polkadot is expected to under-perform the SEELE. But the crypto coin apears to be less risky and, when comparing its historical volatility, Polkadot is 32.84 times less risky than SEELE. The crypto coin trades about -0.01 of its potential returns per unit of risk. The SEELE is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.71  in SEELE on December 29, 2023 and sell it today you would lose (0.71) from holding SEELE or give up 99.69% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy84.63%
ValuesDaily Returns

Polkadot  vs.  SEELE

 Performance 
       Timeline  
Polkadot 

Risk-Adjusted Performance

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Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Polkadot are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Polkadot exhibited solid returns over the last few months and may actually be approaching a breakup point.
SEELE 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days SEELE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, SEELE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Polkadot and SEELE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Polkadot and SEELE

The main advantage of trading using opposite Polkadot and SEELE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polkadot position performs unexpectedly, SEELE 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 SEELE will offset losses from the drop in SEELE's long position.
The idea behind Polkadot and SEELE 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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