Correlation Between DKargo and AION

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

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

Diversification Opportunities for DKargo and AION

0.31

Correlation Coefficient

DKargo  AION

Weak diversification

The 3 months correlation between DKargo and AION is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding dKargo and AION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AION and DKargo 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 dKargo are associated (or correlated) with AION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AION has no effect on the direction of DKargo i.e., DKargo and AION go up and down completely randomly.

Pair Corralation between DKargo and AION

Assuming the 90 days trading horizon dKargo is expected to under-perform the AION. But the crypto coin apears to be less risky and, when comparing its historical volatility, dKargo is 13.75 times less risky than AION. The crypto coin trades about -0.09 of its potential returns per unit of risk. The AION is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  0.13  in AION on January 20, 2024 and sell it today you would earn a total of  0.38  from holding AION or generate 287.56% return on investment over 90 days.

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

dKargo  vs.  AION

dKargo

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in dKargo are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, DKargo exhibited solid returns over the last few months and may actually be approaching a breakup point.

AION

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AION are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, AION exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DKargo and AION

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

The idea behind dKargo and AION 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 Stocks Directory module to find actively traded stocks across global markets.