Correlation Between GT and LUNA

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

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

Diversification Opportunities for GT and LUNA

0.75

Correlation Coefficient

GT  LUNA

Poor diversification

The 3 months correlation between GT and LUNA is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding GT and LUNA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUNA and GT 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 GT are associated (or correlated) with LUNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUNA has no effect on the direction of GT i.e., GT and LUNA go up and down completely randomly.

Pair Corralation between GT and LUNA

Assuming the 90 days horizon GT is expected to under-perform the LUNA. But the crypto coin apears to be less risky and, when comparing its historical volatility, GT is 2.33 times less risky than LUNA. The crypto coin trades about -0.16 of its potential returns per unit of risk. The LUNA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  19.00  in LUNA on April 25, 2025 and sell it today you would lose (2.00) from holding LUNA or give up 10.53% of portfolio value over 90 days.

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

GT  vs.  LUNA

GT

Risk-Adjusted Performance

Very Weak

Over the last 90 days GT 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 fundamental indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for GT shareholders.

LUNA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with GT and LUNA

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

The idea behind GT and LUNA 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.