Correlation Between Chainlink and Celestia

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

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

Diversification Opportunities for Chainlink and Celestia

0.77

Correlation Coefficient

Chainlink  Celestia

Poor diversification

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

Pair Corralation between Chainlink and Celestia

Assuming the 90 days trading horizon Chainlink is expected to generate 39.99 times less return on investment than Celestia. But when comparing it to its historical volatility, Chainlink is 16.96 times less risky than Celestia. It trades about 0.04 of its potential returns per unit of risk. Celestia is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Celestia on February 1, 2024 and sell it today you would earn a total of  971.00  from holding Celestia 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

Chainlink  vs.  Celestia

Chainlink

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chainlink 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 Chainlink shareholders.

Celestia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celestia 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 Celestia shareholders.

Pair Trading with Chainlink and Celestia

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

The idea behind Chainlink and Celestia 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.