Correlation Between Polygon and Zilliqa

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

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

Diversification Opportunities for Polygon and Zilliqa

0.71

Correlation Coefficient

Polygon  Zilliqa

Poor diversification

The 3 months correlation between Polygon and Zilliqa is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Polygon and Zilliqa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zilliqa 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 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 Polygon i.e., Polygon and Zilliqa go up and down completely randomly.

Pair Corralation between Polygon and Zilliqa

Assuming the 90 days trading horizon Polygon is expected to under-perform the Zilliqa. But the crypto coin apears to be less risky and, when comparing its historical volatility, Polygon is 1.11 times less risky than Zilliqa. The crypto coin trades about -0.27 of its potential returns per unit of risk. The Zilliqa is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  3.55  in Zilliqa on January 26, 2024 and sell it today you would lose (0.99) from holding Zilliqa or give up 27.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Polygon  vs.  Zilliqa

Polygon

Risk-Adjusted Performance

0 of 100

Very Weak

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

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zilliqa are ranked lower than 6 (%) 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 Polygon and Zilliqa

The main advantage of trading using opposite Polygon and Zilliqa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polygon 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 Polygon 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.