Correlation Between Uquid Coin and EM

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

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

Diversification Opportunities for Uquid Coin and EM

0.59

Correlation Coefficient

Uquid Coin  EM

Very weak diversification

The 3 months correlation between Uquid and EM is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Uquid Coin and EM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EM and Uquid Coin 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 Uquid Coin are associated (or correlated) with EM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EM has no effect on the direction of Uquid Coin i.e., Uquid Coin and EM go up and down completely randomly.

Pair Corralation between Uquid Coin and EM

Assuming the 90 days trading horizon Uquid Coin is expected to under-perform the EM. In addition to that, Uquid Coin is 1.54 times more volatile than EM. It trades about -0.14 of its total potential returns per unit of risk. EM is currently generating about -0.11 per unit of volatility. If you would invest  0.08  in EM on February 5, 2024 and sell it today you would lose (0.01) from holding EM or give up 7.62% of portfolio value over 90 days.

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

Uquid Coin  vs.  EM

Uquid Coin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uquid Coin 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 fundamental indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for Uquid Coin shareholders.

EM

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EM are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, EM may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Uquid Coin and EM

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

The idea behind Uquid Coin and EM 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.