Correlation Between DKargo and Chainlink

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

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

Diversification Opportunities for DKargo and Chainlink

0.58

Correlation Coefficient

DKargo  Chainlink

Very weak diversification

The 3 months correlation between DKargo and Chainlink is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding dKargo and Chainlink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chainlink 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 Chainlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chainlink has no effect on the direction of DKargo i.e., DKargo and Chainlink go up and down completely randomly.

Pair Corralation between DKargo and Chainlink

Assuming the 90 days trading horizon dKargo is expected to generate 1.19 times more return on investment than Chainlink. However, DKargo is 1.19 times more volatile than Chainlink. It trades about -0.09 of its potential returns per unit of risk. Chainlink is currently generating about -0.22 per unit of risk. If you would invest  3.51  in dKargo on January 21, 2024 and sell it today you would lose (0.49) from holding dKargo or give up 13.96% of portfolio value over 90 days.

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

dKargo  vs.  Chainlink

dKargo

Risk-Adjusted Performance

2 of 100

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 may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Chainlink

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chainlink are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Chainlink is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DKargo and Chainlink

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

The idea behind dKargo and Chainlink 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.