Correlation Between LEO Token and Kava

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

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

Diversification Opportunities for LEO Token and Kava

-0.34

Correlation Coefficient

LEO Token  Kava

Very good diversification

The 3 months correlation between LEO and Kava is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding LEO Token and Kava in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kava and LEO Token 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 LEO Token are associated (or correlated) with Kava. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kava has no effect on the direction of LEO Token i.e., LEO Token and Kava go up and down completely randomly.

Pair Corralation between LEO Token and Kava

Assuming the 90 days trading horizon LEO Token is expected to generate 0.53 times more return on investment than Kava. However, LEO Token is 1.9 times less risky than Kava. It trades about 0.01 of its potential returns per unit of risk. Kava is currently generating about -0.02 per unit of risk. If you would invest  897.00  in LEO Token on April 24, 2025 and sell it today you would earn a total of  3.00  from holding LEO Token or generate 0.33% return on investment over 90 days.

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

LEO Token  vs.  Kava

LEO Token

Risk-Adjusted Performance

Very Weak

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

Kava

Risk-Adjusted Performance

Very Weak

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

Pair Trading with LEO Token and Kava

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

The idea behind LEO Token and Kava 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.