Correlation Between Klaytn and KMD

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

Diversification Opportunities for Klaytn and KMD

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Klaytn and KMD is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Klaytn and KMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMD and Klaytn 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 Klaytn are associated (or correlated) with KMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMD has no effect on the direction of Klaytn i.e., Klaytn and KMD go up and down completely randomly.

Pair Corralation between Klaytn and KMD

Assuming the 90 days trading horizon Klaytn is expected to under-perform the KMD. But the crypto coin apears to be less risky and, when comparing its historical volatility, Klaytn is 1.24 times less risky than KMD. The crypto coin trades about -0.01 of its potential returns per unit of risk. The KMD is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  49.00  in KMD on December 30, 2023 and sell it today you would lose (8.00) from holding KMD or give up 16.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Klaytn  vs.  KMD

 Performance 
       Timeline  
Klaytn 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Klaytn are ranked lower than 8 (%) 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.
KMD 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in KMD are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, KMD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Klaytn and KMD Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Klaytn and KMD

The main advantage of trading using opposite Klaytn and KMD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klaytn position performs unexpectedly, KMD 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 KMD will offset losses from the drop in KMD's long position.
The idea behind Klaytn and KMD 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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