Correlation Between Polygon and Kyber Network

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Can any of the company-specific risk be diversified away by investing in both Polygon and Kyber Network 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 Polygon and Kyber Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polygon and Kyber Network Crystal, you can compare the effects of market volatilities on Polygon and Kyber Network 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 Polygon with a short position of Kyber Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polygon and Kyber Network.

Diversification Opportunities for Polygon and Kyber Network

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Polygon and Kyber is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Polygon and Kyber Network Crystal v2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyber Network Crystal and Polygon 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 Polygon are associated (or correlated) with Kyber Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyber Network Crystal has no effect on the direction of Polygon i.e., Polygon and Kyber Network go up and down completely randomly.

Pair Corralation between Polygon and Kyber Network

Assuming the 90 days trading horizon Polygon is expected to generate 14.61 times less return on investment than Kyber Network. But when comparing it to its historical volatility, Polygon is 1.42 times less risky than Kyber Network. It trades about 0.02 of its potential returns per unit of risk. Kyber Network Crystal is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  68.00  in Kyber Network Crystal on December 29, 2023 and sell it today you would earn a total of  21.00  from holding Kyber Network Crystal or generate 30.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Polygon  vs.  Kyber Network Crystal v2

 Performance 
       Timeline  
Polygon 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Polygon are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Polygon may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Kyber Network Crystal 

Risk-Adjusted Performance

7 of 100

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

Polygon and Kyber Network Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Polygon and Kyber Network

The main advantage of trading using opposite Polygon and Kyber Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polygon position performs unexpectedly, Kyber Network 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 Kyber Network will offset losses from the drop in Kyber Network's long position.
The idea behind Polygon and Kyber Network Crystal 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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