Correlation Between Osmosis and KEY

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

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

Diversification Opportunities for Osmosis and KEY

0.06

Correlation Coefficient

Osmosis  KEY

Significant diversification

The 3 months correlation between Osmosis and KEY is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Osmosis and KEY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEY and Osmosis 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 Osmosis are associated (or correlated) with KEY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEY has no effect on the direction of Osmosis i.e., Osmosis and KEY go up and down completely randomly.

Pair Corralation between Osmosis and KEY

Assuming the 90 days trading horizon Osmosis is expected to under-perform the KEY. But the crypto coin apears to be less risky and, when comparing its historical volatility, Osmosis is 1.5 times less risky than KEY. The crypto coin trades about -0.3 of its potential returns per unit of risk. The KEY is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  0.98  in KEY on February 7, 2024 and sell it today you would lose (0.27) from holding KEY or give up 27.45% of portfolio value over 90 days.

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

Osmosis  vs.  KEY

Osmosis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Osmosis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for Osmosis shareholders.

KEY

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KEY are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, KEY exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Osmosis and KEY

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

The idea behind Osmosis and KEY 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.