Correlation Between True USD and Zilliqa

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

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

Diversification Opportunities for True USD and Zilliqa

0.65

Correlation Coefficient

True USD  Zilliqa

Poor diversification

The 3 months correlation between True and Zilliqa is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding True USD and Zilliqa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zilliqa 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 Zilliqa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zilliqa has no effect on the direction of True USD i.e., True USD and Zilliqa go up and down completely randomly.

Pair Corralation between True USD and Zilliqa

Assuming the 90 days trading horizon True USD is expected to generate 5.92 times less return on investment than Zilliqa. But when comparing it to its historical volatility, True USD is 8.86 times less risky than Zilliqa. It trades about 0.06 of its potential returns per unit of risk. Zilliqa is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2.35  in Zilliqa on January 18, 2024 and sell it today you would earn a total of  0.05  from holding Zilliqa or generate 2.13% return on investment over 90 days.

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

True USD  vs.  Zilliqa

True USD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in True USD are ranked lower than 1 (%) 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.

Zilliqa

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zilliqa are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Zilliqa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with True USD and Zilliqa

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

The idea behind True USD and Zilliqa 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.