Correlation Between True USD and HT

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

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

Diversification Opportunities for True USD and HT

-0.39

Correlation Coefficient

True USD  HT

Very good diversification

The 3 months correlation between True and HT is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding True USD and HT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HT and True USD 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 True USD are associated (or correlated) with HT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HT has no effect on the direction of True USD i.e., True USD and HT go up and down completely randomly.

Pair Corralation between True USD and HT

Assuming the 90 days trading horizon True USD is expected to generate 0.08 times more return on investment than HT. However, True USD is 12.8 times less risky than HT. It trades about -0.09 of its potential returns per unit of risk. HT is currently generating about -0.14 per unit of risk. If you would invest  101.00  in True USD on January 21, 2024 and sell it today you would lose (1.00) from holding True USD or give up 0.99% of portfolio value over 90 days.

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

True USD  vs.  HT

True USD

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in True USD are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, True USD is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

HT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HT 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 fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for HT shareholders.

Pair Trading with True USD and HT

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

The idea behind True USD and HT 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.