Correlation Between Chainlink and RLC

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

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

Diversification Opportunities for Chainlink and RLC

0.77

Correlation Coefficient

Chainlink  RLC

Poor diversification

The 3 months correlation between Chainlink and RLC is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and RLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLC and Chainlink 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 Chainlink are associated (or correlated) with RLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLC has no effect on the direction of Chainlink i.e., Chainlink and RLC go up and down completely randomly.

Pair Corralation between Chainlink and RLC

Assuming the 90 days trading horizon Chainlink is expected to generate 0.95 times more return on investment than RLC. However, Chainlink is 1.05 times less risky than RLC. It trades about 0.09 of its potential returns per unit of risk. RLC is currently generating about 0.01 per unit of risk. If you would invest  1,502  in Chainlink on April 22, 2025 and sell it today you would earn a total of  338.00  from holding Chainlink or generate 22.5% return on investment over 90 days.

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

Chainlink  vs.  RLC

Chainlink

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chainlink are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Chainlink exhibited solid returns over the last few months and may actually be approaching a breakup point.

RLC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Chainlink and RLC

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

The idea behind Chainlink and RLC 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.