Correlation Between Ontology and KMD
Can any of the company-specific risk be diversified away by investing in both Ontology and KMD 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 Ontology and KMD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ontology and KMD, you can compare the effects of market volatilities on Ontology and KMD 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 Ontology with a short position of KMD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ontology and KMD.
Diversification Opportunities for Ontology and KMD
Poor diversification
The 3 months correlation between Ontology and KMD is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ontology and KMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMD and Ontology 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 Ontology are associated (or correlated) with KMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMD has no effect on the direction of Ontology i.e., Ontology and KMD go up and down completely randomly.
Pair Corralation between Ontology and KMD
Assuming the 90 days trading horizon Ontology is expected to generate 1.75 times more return on investment than KMD. However, Ontology is 1.75 times more volatile than KMD. It trades about 0.08 of its potential returns per unit of risk. KMD is currently generating about -0.08 per unit of risk. If you would invest 34.00 in Ontology on February 7, 2024 and sell it today you would earn a total of 2.00 from holding Ontology or generate 5.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Ontology vs. KMD
Performance |
Timeline |
Ontology |
KMD |
Ontology and KMD Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ontology and KMD
The main advantage of trading using opposite Ontology and KMD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ontology position performs unexpectedly, KMD 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 KMD will offset losses from the drop in KMD's long position.Ontology vs. Ontology Gas | Ontology vs. Staked Ether | Ontology vs. XCAD Network | Ontology vs. Phala Network |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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