Correlation Between NEXO and KuCoin Token

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

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

Diversification Opportunities for NEXO and KuCoin Token

0.61

Correlation Coefficient

NEXO  KuCoin Token

Poor diversification

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

Pair Corralation between NEXO and KuCoin Token

Assuming the 90 days trading horizon NEXO is expected to generate 0.67 times more return on investment than KuCoin Token. However, NEXO is 1.5 times less risky than KuCoin Token. It trades about -0.11 of its potential returns per unit of risk. KuCoin Token is currently generating about -0.14 per unit of risk. If you would invest  135.00  in NEXO on January 27, 2024 and sell it today you would lose (12.00) from holding NEXO or give up 8.89% of portfolio value over 90 days.

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

NEXO  vs.  KuCoin Token

NEXO

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEXO are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, NEXO exhibited solid returns over the last few months and may actually be approaching a breakup point.

KuCoin Token

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KuCoin Token are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, KuCoin Token may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with NEXO and KuCoin Token

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

The idea behind NEXO and KuCoin 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.