Correlation Between NEO and Gatechain Token

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

Diversification Opportunities for NEO and Gatechain Token

0.61
  Correlation Coefficient

Poor diversification

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

Pair Corralation between NEO and Gatechain Token

Assuming the 90 days trading horizon NEO is expected to generate 3.18 times less return on investment than Gatechain Token. But when comparing it to its historical volatility, NEO is 1.22 times less risky than Gatechain Token. It trades about 0.18 of its potential returns per unit of risk. Gatechain Token is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest  503.00  in Gatechain Token on December 29, 2023 and sell it today you would earn a total of  491.00  from holding Gatechain Token or generate 97.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

NEO  vs.  Gatechain Token

 Performance 
       Timeline  
NEO 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in NEO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, NEO exhibited solid returns over the last few months and may actually be approaching a breakup point.
Gatechain Token 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Gatechain Token are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Gatechain Token exhibited solid returns over the last few months and may actually be approaching a breakup point.

NEO and Gatechain Token Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NEO and Gatechain Token

The main advantage of trading using opposite NEO and Gatechain Token positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEO position performs unexpectedly, Gatechain Token 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 Gatechain Token will offset losses from the drop in Gatechain Token's long position.
The idea behind NEO and Gatechain Token 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 Stocks Directory module to find actively traded stocks across global markets.

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