Correlation Between DKargo and Marinade

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

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

Diversification Opportunities for DKargo and Marinade

0.68

Correlation Coefficient

DKargo  Marinade

Poor diversification

The 3 months correlation between DKargo and Marinade is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding dKargo and Marinade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marinade 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 Marinade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marinade has no effect on the direction of DKargo i.e., DKargo and Marinade go up and down completely randomly.

Pair Corralation between DKargo and Marinade

Assuming the 90 days trading horizon DKargo is expected to generate 49.75 times less return on investment than Marinade. But when comparing it to its historical volatility, dKargo is 7.95 times less risky than Marinade. It trades about 0.01 of its potential returns per unit of risk. Marinade is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Marinade on February 7, 2024 and sell it today you would earn a total of  18.00  from holding Marinade or generate 9.223372036854776E16% return on investment over 90 days.

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

dKargo  vs.  Marinade

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 June 2024.

Marinade

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marinade has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for Marinade shareholders.

Pair Trading with DKargo and Marinade

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

The idea behind dKargo and Marinade 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.