Correlation Between THC and XDN

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

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

Diversification Opportunities for THC and XDN

0.61

Correlation Coefficient

THC  XDN

Poor diversification

The 3 months correlation between THC and XDN is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding THC and XDN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XDN and THC 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 THC are associated (or correlated) with XDN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XDN has no effect on the direction of THC i.e., THC and XDN go up and down completely randomly.

Pair Corralation between THC and XDN

Assuming the 90 days trading horizon THC is expected to generate 0.28 times more return on investment than XDN. However, THC is 3.62 times less risky than XDN. It trades about 0.21 of its potential returns per unit of risk. XDN is currently generating about -0.06 per unit of risk. If you would invest  0.09  in THC on April 21, 2025 and sell it today you would earn a total of  0.02  from holding THC or generate 26.1% return on investment over 90 days.

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

THC  vs.  XDN

THC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in THC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, THC exhibited solid returns over the last few months and may actually be approaching a breakup point.

XDN

Risk-Adjusted Performance

Very Weak

Over the last 90 days XDN 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 August 2025. The latest tumult may also be a sign of longer-term up-swing for XDN shareholders.

Pair Trading with THC and XDN

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

The idea behind THC and XDN 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.

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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.