Correlation Between Phala Network and Uniswap Protocol

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

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

Diversification Opportunities for Phala Network and Uniswap Protocol

0.71

Correlation Coefficient

Phala Network  Uniswap Protocol

Poor diversification

The 3 months correlation between Phala and Uniswap is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Phala Network and Uniswap Protocol Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniswap Protocol Token and Phala Network 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 Phala Network are associated (or correlated) with Uniswap Protocol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniswap Protocol Token has no effect on the direction of Phala Network i.e., Phala Network and Uniswap Protocol go up and down completely randomly.

Pair Corralation between Phala Network and Uniswap Protocol

Assuming the 90 days trading horizon Phala Network is expected to generate 1.52 times more return on investment than Uniswap Protocol. However, Phala Network is 1.52 times more volatile than Uniswap Protocol Token. It trades about -0.06 of its potential returns per unit of risk. Uniswap Protocol Token is currently generating about -0.27 per unit of risk. If you would invest  26.00  in Phala Network on January 16, 2024 and sell it today you would lose (5.00) from holding Phala Network or give up 19.23% of portfolio value over 90 days.

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

Phala Network  vs.  Uniswap Protocol Token

Phala Network

Risk-Adjusted Performance

12 of 100

Good

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

Uniswap Protocol Token

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uniswap Protocol Token are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Uniswap Protocol exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phala Network and Uniswap Protocol

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

The idea behind Phala Network and Uniswap Protocol 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.