Correlation Between Curve DAO and Radworks

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

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

Diversification Opportunities for Curve DAO and Radworks

0.82

Correlation Coefficient

Curve DAO  Radworks

Very poor diversification

The 3 months correlation between Curve and Radworks is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Curve DAO Token and Radworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radworks and Curve DAO 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 Curve DAO Token are associated (or correlated) with Radworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radworks has no effect on the direction of Curve DAO i.e., Curve DAO and Radworks go up and down completely randomly.

Pair Corralation between Curve DAO and Radworks

Assuming the 90 days trading horizon Curve DAO Token is expected to under-perform the Radworks. But the crypto coin apears to be less risky and, when comparing its historical volatility, Curve DAO Token is 1.13 times less risky than Radworks. The crypto coin trades about -0.02 of its potential returns per unit of risk. The Radworks is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  162.00  in Radworks on February 7, 2024 and sell it today you would earn a total of  17.00  from holding Radworks or generate 10.49% return on investment over 90 days.

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

Curve DAO Token  vs.  Radworks

Curve DAO Token

Risk-Adjusted Performance

0 of 100

Very Weak

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

Radworks

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Radworks are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Radworks may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Curve DAO and Radworks

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

The idea behind Curve DAO Token and Radworks 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.