Correlation Between Aave and ApeCoin

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Can any of the company-specific risk be diversified away by investing in both Aave and ApeCoin 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 Aave and ApeCoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aave and ApeCoin, you can compare the effects of market volatilities on Aave and ApeCoin 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 Aave with a short position of ApeCoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aave and ApeCoin.

Diversification Opportunities for Aave and ApeCoin

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Aave and ApeCoin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aave and ApeCoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ApeCoin and Aave 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 Aave are associated (or correlated) with ApeCoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ApeCoin has no effect on the direction of Aave i.e., Aave and ApeCoin go up and down completely randomly.

Pair Corralation between Aave and ApeCoin

Assuming the 90 days trading horizon Aave is expected to generate 1.05 times more return on investment than ApeCoin. However, Aave is 1.05 times more volatile than ApeCoin. It trades about 0.2 of its potential returns per unit of risk. ApeCoin is currently generating about 0.12 per unit of risk. If you would invest  16,663  in Aave on April 24, 2025 and sell it today you would earn a total of  14,277  from holding Aave or generate 85.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Aave  vs.  ApeCoin

 Performance 
       Timeline  
Aave 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Aave are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Aave exhibited solid returns over the last few months and may actually be approaching a breakup point.
ApeCoin 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in ApeCoin are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, ApeCoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aave and ApeCoin Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aave and ApeCoin

The main advantage of trading using opposite Aave and ApeCoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aave position performs unexpectedly, ApeCoin 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 ApeCoin will offset losses from the drop in ApeCoin's long position.
The idea behind Aave and ApeCoin 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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