Correlation Between Binance Coin and KuCoin Token

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

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

Diversification Opportunities for Binance Coin and KuCoin Token

0.21

Correlation Coefficient

Binance Coin  KuCoin Token

Modest diversification

The 3 months correlation between Binance and KuCoin is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and KuCoin Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KuCoin Token and Binance 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 Binance Coin are associated (or correlated) with KuCoin Token. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KuCoin Token has no effect on the direction of Binance Coin i.e., Binance Coin and KuCoin Token go up and down completely randomly.

Pair Corralation between Binance Coin and KuCoin Token

Assuming the 90 days trading horizon Binance Coin is expected to generate 0.89 times more return on investment than KuCoin Token. However, Binance Coin is 1.12 times less risky than KuCoin Token. It trades about 0.21 of its potential returns per unit of risk. KuCoin Token is currently generating about 0.0 per unit of risk. If you would invest  39,488  in Binance Coin on January 27, 2024 and sell it today you would earn a total of  21,782  from holding Binance Coin or generate 55.16% return on investment over 90 days.

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

Binance Coin  vs.  KuCoin Token

Binance Coin

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Binance Coin are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Binance Coin exhibited solid returns over the last few months and may actually be approaching a breakup point.

KuCoin Token

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Binance Coin and KuCoin Token

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

The idea behind Binance Coin and KuCoin Token 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.