Correlation Between Chainlink and Zilliqa

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

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

Diversification Opportunities for Chainlink and Zilliqa

0.5

Correlation Coefficient

Chainlink  Zilliqa

Very weak diversification

The 3 months correlation between Chainlink and Zilliqa is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and Zilliqa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zilliqa 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 Zilliqa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zilliqa has no effect on the direction of Chainlink i.e., Chainlink and Zilliqa go up and down completely randomly.

Pair Corralation between Chainlink and Zilliqa

Assuming the 90 days trading horizon Chainlink is expected to under-perform the Zilliqa. But the crypto coin apears to be less risky and, when comparing its historical volatility, Chainlink is 1.38 times less risky than Zilliqa. The crypto coin trades about -0.22 of its potential returns per unit of risk. The Zilliqa is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  3.28  in Zilliqa on January 21, 2024 and sell it today you would lose (0.78) from holding Zilliqa or give up 23.78% of portfolio value over 90 days.

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

Chainlink  vs.  Zilliqa

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.

Zilliqa

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Chainlink and Zilliqa

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

The idea behind Chainlink and Zilliqa 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.