Correlation Between Klaytn and Power Ledger

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

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

Diversification Opportunities for Klaytn and Power Ledger

0.9

Correlation Coefficient

Klaytn  Power Ledger

Almost no diversification

The 3 months correlation between Klaytn and Power is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Klaytn and Power Ledger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Ledger 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 Power Ledger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Ledger has no effect on the direction of Klaytn i.e., Klaytn and Power Ledger go up and down completely randomly.

Pair Corralation between Klaytn and Power Ledger

Assuming the 90 days trading horizon Klaytn is expected to under-perform the Power Ledger. But the crypto coin apears to be less risky and, when comparing its historical volatility, Klaytn is 1.18 times less risky than Power Ledger. The crypto coin trades about -0.01 of its potential returns per unit of risk. The Power Ledger is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  41.00  in Power Ledger on January 24, 2024 and sell it today you would lose (10.00) from holding Power Ledger or give up 24.39% of portfolio value over 90 days.

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

Klaytn  vs.  Power Ledger

Klaytn

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Klaytn are ranked lower than 4 (%) 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.

Power Ledger

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Power Ledger are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Power Ledger exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Klaytn and Power Ledger

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

The idea behind Klaytn and Power Ledger 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.