Correlation Between Open Network and Hive

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

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

Diversification Opportunities for Open Network and Hive

0.29

Correlation Coefficient

Open Network  Hive

Modest diversification

The 3 months correlation between Open and Hive is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding The Open Network and Hive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hive and Open Network 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 The Open Network are associated (or correlated) with Hive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hive has no effect on the direction of Open Network i.e., Open Network and Hive go up and down completely randomly.

Pair Corralation between Open Network and Hive

Assuming the 90 days trading horizon The Open Network is expected to generate 1.09 times more return on investment than Hive. However, Open Network is 1.09 times more volatile than Hive. It trades about 0.06 of its potential returns per unit of risk. Hive is currently generating about -0.1 per unit of risk. If you would invest  488.00  in The Open Network on January 31, 2024 and sell it today you would earn a total of  23.00  from holding The Open Network or generate 4.71% return on investment over 90 days.

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

The Open Network  vs.  Hive

Open Network

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Open Network are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Open Network displayed solid returns over the last few months and may actually be approaching a breakup point.

Hive

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hive are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Hive may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Open Network and Hive

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

The idea behind The Open Network and Hive 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.