Correlation Between TMTG and Decred

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

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

Diversification Opportunities for TMTG and Decred

0.0

Correlation Coefficient

TMTG  Decred

Pay attention - limited upside

The 3 months correlation between TMTG and Decred is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TMTG and Decred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decred and TMTG 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 TMTG are associated (or correlated) with Decred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decred has no effect on the direction of TMTG i.e., TMTG and Decred go up and down completely randomly.

Pair Corralation between TMTG and Decred

Assuming the 90 days trading horizon TMTG is expected to under-perform the Decred. But the crypto coin apears to be less risky and, when comparing its historical volatility, TMTG is 1.24 times less risky than Decred. The crypto coin trades about -0.02 of its potential returns per unit of risk. The Decred is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,638  in Decred on February 6, 2024 and sell it today you would lose (1,490) from holding Decred or give up 40.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	69.26%
Values	Daily Returns

TMTG  vs.  Decred

TMTG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMTG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TMTG is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Decred

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Decred are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Decred exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TMTG and Decred

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

The idea behind TMTG and Decred 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.