Correlation Between SC and Ontology
Can any of the company-specific risk be diversified away by investing in both SC and Ontology 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 SC and Ontology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SC and Ontology, you can compare the effects of market volatilities on SC and Ontology 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 SC with a short position of Ontology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SC and Ontology.
Diversification Opportunities for SC and Ontology
Very good diversification
The 3 months correlation between SC and Ontology is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding SC and Ontology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontology and SC 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 SC are associated (or correlated) with Ontology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontology has no effect on the direction of SC i.e., SC and Ontology go up and down completely randomly.
Pair Corralation between SC and Ontology
Assuming the 90 days horizon SC is expected to under-perform the Ontology. But the crypto coin apears to be less risky and, when comparing its historical volatility, SC is 1.83 times less risky than Ontology. The crypto coin trades about -0.18 of its potential returns per unit of risk. The Ontology is currently generating about 0.08 of returns per unit of risk over similar time horizon. 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 Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SC vs. Ontology
Performance |
Timeline |
SC |
Ontology |
SC and Ontology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SC and Ontology
The main advantage of trading using opposite SC and Ontology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SC position performs unexpectedly, Ontology 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 Ontology will offset losses from the drop in Ontology's long position.The idea behind SC and Ontology 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Money Managers Screen money managers from public funds and ETFs managed around the world |