Correlation Between Conflux Network and Dogecoin

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

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

Diversification Opportunities for Conflux Network and Dogecoin

0.6

Correlation Coefficient

Conflux Network  Dogecoin

Poor diversification

The 3 months correlation between Conflux and Dogecoin is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Conflux Network and Dogecoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dogecoin and Conflux 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 Conflux Network are associated (or correlated) with Dogecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dogecoin has no effect on the direction of Conflux Network i.e., Conflux Network and Dogecoin go up and down completely randomly.

Pair Corralation between Conflux Network and Dogecoin

Assuming the 90 days trading horizon Conflux Network is expected to under-perform the Dogecoin. In addition to that, Conflux Network is 1.06 times more volatile than Dogecoin. It trades about -0.1 of its total potential returns per unit of risk. Dogecoin is currently generating about 0.01 per unit of volatility. If you would invest  17.00  in Dogecoin on March 12, 2024 and sell it today you would lose (2.00) from holding Dogecoin or give up 11.76% of portfolio value over 90 days.

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

Conflux Network  vs.  Dogecoin

Conflux Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Conflux Network has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for Conflux Network shareholders.

Dogecoin

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Conflux Network and Dogecoin

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

The idea behind Conflux Network and Dogecoin 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.