Correlation Between Uniswap Protocol and LEMO

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

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

Diversification Opportunities for Uniswap Protocol and LEMO

0.85

Correlation Coefficient

Uniswap Protocol  LEMO

Very poor diversification

The 3 months correlation between Uniswap and LEMO is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Uniswap Protocol Token and LEMO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEMO and Uniswap Protocol 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 Uniswap Protocol Token are associated (or correlated) with LEMO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEMO has no effect on the direction of Uniswap Protocol i.e., Uniswap Protocol and LEMO go up and down completely randomly.

Pair Corralation between Uniswap Protocol and LEMO

Assuming the 90 days trading horizon Uniswap Protocol is expected to generate 1.21 times less return on investment than LEMO. In addition to that, Uniswap Protocol is 1.45 times more volatile than LEMO. It trades about 0.16 of its total potential returns per unit of risk. LEMO is currently generating about 0.27 per unit of volatility. If you would invest  0.00  in LEMO on April 24, 2025 and sell it today you would earn a total of  0.00  from holding LEMO or generate 138.89% return on investment over 90 days.

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

Uniswap Protocol Token  vs.  LEMO

Uniswap Protocol Token

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Uniswap Protocol Token are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Uniswap Protocol exhibited solid returns over the last few months and may actually be approaching a breakup point.

LEMO

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LEMO are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, LEMO exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uniswap Protocol and LEMO

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

The idea behind Uniswap Protocol Token and LEMO 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.