Correlation Between Algorand and SALT

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

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

Diversification Opportunities for Algorand and SALT

-0.41

Correlation Coefficient

Algorand  SALT

Very good diversification

The 3 months correlation between Algorand and SALT is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and SALT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SALT and Algorand 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 Algorand are associated (or correlated) with SALT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SALT has no effect on the direction of Algorand i.e., Algorand and SALT go up and down completely randomly.

Pair Corralation between Algorand and SALT

Assuming the 90 days trading horizon Algorand is expected to generate 19.38 times more return on investment than SALT. However, Algorand is 19.38 times more volatile than SALT. It trades about 0.11 of its potential returns per unit of risk. SALT is currently generating about 0.59 per unit of risk. If you would invest  21.00  in Algorand on April 22, 2025 and sell it today you would earn a total of  8.00  from holding Algorand or generate 38.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	7.69%
Values	Daily Returns

Algorand  vs.  SALT

Algorand

Risk-Adjusted Performance

OK

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

SALT

Risk-Adjusted Performance

Excellent

Over the last 90 days SALT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady fundamental indicators, SALT may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Algorand and SALT

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

The idea behind Algorand and SALT 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.