Correlation Between Chainlink and ZCash

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

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

Diversification Opportunities for Chainlink and ZCash

0.61

Correlation Coefficient

Chainlink  ZCash

Poor diversification

The 3 months correlation between Chainlink and ZCash is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and ZCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZCash 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 ZCash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZCash has no effect on the direction of Chainlink i.e., Chainlink and ZCash go up and down completely randomly.

Pair Corralation between Chainlink and ZCash

Assuming the 90 days trading horizon Chainlink is expected to under-perform the ZCash. But the crypto coin apears to be less risky and, when comparing its historical volatility, Chainlink is 1.06 times less risky than ZCash. The crypto coin trades about -0.18 of its potential returns per unit of risk. The ZCash is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  2,501  in ZCash on January 16, 2024 and sell it today you would lose (404.00) from holding ZCash or give up 16.15% of portfolio value over 90 days.

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

Chainlink  vs.  ZCash

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 latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Chainlink shareholders.

ZCash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZCash has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, ZCash 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 ZCash

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

The idea behind Chainlink and ZCash 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.