Correlation Between Ontology and Loopring
Can any of the company-specific risk be diversified away by investing in both Ontology and Loopring 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 Loopring into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ontology and Loopring, you can compare the effects of market volatilities on Ontology and Loopring 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 Loopring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ontology and Loopring.
Diversification Opportunities for Ontology and Loopring
Very poor diversification
The 3 months correlation between Ontology and Loopring is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ontology and Loopring in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loopring 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 Loopring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loopring has no effect on the direction of Ontology i.e., Ontology and Loopring go up and down completely randomly.
Pair Corralation between Ontology and Loopring
Assuming the 90 days trading horizon Ontology is expected to generate 1.76 times more return on investment than Loopring. However, Ontology is 1.76 times more volatile than Loopring. It trades about 0.0 of its potential returns per unit of risk. Loopring is currently generating about -0.36 per unit of risk. If you would invest 32.00 in Ontology on January 19, 2024 and sell it today you would lose (3.00) from holding Ontology or give up 9.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Ontology vs. Loopring
Performance |
Timeline |
Ontology |
Loopring |
Ontology and Loopring Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ontology and Loopring
The main advantage of trading using opposite Ontology and Loopring positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ontology position performs unexpectedly, Loopring 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 Loopring will offset losses from the drop in Loopring's long position.The idea behind Ontology and Loopring 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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