Correlation Between Chainlink and VeChain

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

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

Diversification Opportunities for Chainlink and VeChain

0.6

Correlation Coefficient

Chainlink  VeChain

Poor diversification

The 3 months correlation between Chainlink and VeChain is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and VeChain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VeChain 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 VeChain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VeChain has no effect on the direction of Chainlink i.e., Chainlink and VeChain go up and down completely randomly.

Pair Corralation between Chainlink and VeChain

Assuming the 90 days trading horizon Chainlink is expected to under-perform the VeChain. But the crypto coin apears to be less risky and, when comparing its historical volatility, Chainlink is 1.01 times less risky than VeChain. The crypto coin trades about -0.23 of its potential returns per unit of risk. The VeChain is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4.15  in VeChain on January 20, 2024 and sell it today you would lose (0.20) from holding VeChain or give up 4.82% of portfolio value over 90 days.

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

Chainlink  vs.  VeChain

Chainlink

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chainlink are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Chainlink is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

VeChain

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VeChain are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, VeChain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chainlink and VeChain

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

The idea behind Chainlink and VeChain 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.