Correlation Between TRON and Raydium

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

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

Diversification Opportunities for TRON and Raydium

-0.28

Correlation Coefficient

TRON  Raydium

Very good diversification

The 3 months correlation between TRON and Raydium is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Raydium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raydium and TRON 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 TRON are associated (or correlated) with Raydium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raydium has no effect on the direction of TRON i.e., TRON and Raydium go up and down completely randomly.

Pair Corralation between TRON and Raydium

Assuming the 90 days trading horizon TRON is expected to generate 2.03 times less return on investment than Raydium. But when comparing it to its historical volatility, TRON is 2.43 times less risky than Raydium. It trades about 0.04 of its potential returns per unit of risk. Raydium is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  213.00  in Raydium on January 20, 2024 and sell it today you would lose (58.00) from holding Raydium or give up 27.23% of portfolio value over 90 days.

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

TRON  vs.  Raydium

TRON

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, TRON is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Raydium

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Raydium are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Raydium exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRON and Raydium

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

The idea behind TRON and Raydium 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.