Correlation Between DKargo and Theta Network

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

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

Diversification Opportunities for DKargo and Theta Network

0.83

Correlation Coefficient

DKargo  Theta Network

Very poor diversification

The 3 months correlation between DKargo and Theta is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding dKargo and Theta Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theta Network 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 Theta Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theta Network has no effect on the direction of DKargo i.e., DKargo and Theta Network go up and down completely randomly.

Pair Corralation between DKargo and Theta Network

Assuming the 90 days trading horizon DKargo is expected to generate 10.58 times less return on investment than Theta Network. But when comparing it to its historical volatility, dKargo is 1.51 times less risky than Theta Network. It trades about 0.02 of its potential returns per unit of risk. Theta Network is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  66.00  in Theta Network on January 19, 2024 and sell it today you would earn a total of  134.00  from holding Theta Network or generate 203.03% return on investment over 90 days.

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

dKargo  vs.  Theta Network

dKargo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Theta Network

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Theta Network are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Theta Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DKargo and Theta Network

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

The idea behind dKargo and Theta Network 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.