Correlation Between OmiseGO and Ampleforth

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

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

Diversification Opportunities for OmiseGO and Ampleforth

0.62

Correlation Coefficient

OmiseGO  Ampleforth

Poor diversification

The 3 months correlation between OmiseGO and Ampleforth is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding OmiseGO and Ampleforth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampleforth and OmiseGO 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 OmiseGO are associated (or correlated) with Ampleforth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampleforth has no effect on the direction of OmiseGO i.e., OmiseGO and Ampleforth go up and down completely randomly.

Pair Corralation between OmiseGO and Ampleforth

Assuming the 90 days trading horizon OmiseGO is expected to under-perform the Ampleforth. But the crypto coin apears to be less risky and, when comparing its historical volatility, OmiseGO is 1.39 times less risky than Ampleforth. The crypto coin trades about -0.28 of its potential returns per unit of risk. The Ampleforth is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  109.00  in Ampleforth on January 29, 2024 and sell it today you would lose (3.00) from holding Ampleforth or give up 2.75% of portfolio value over 90 days.

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

OmiseGO  vs.  Ampleforth

OmiseGO

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OmiseGO are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, OmiseGO exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ampleforth

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ampleforth are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Ampleforth exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OmiseGO and Ampleforth

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

The idea behind OmiseGO and Ampleforth 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.