Correlation Between NEM and Kyber Network

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

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

Diversification Opportunities for NEM and Kyber Network

0.91

Correlation Coefficient

NEM  Kyber Network

Almost no diversification

The 3 months correlation between NEM and Kyber is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding NEM and Kyber Network Crystal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyber Network Crystal and NEM 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 NEM are associated (or correlated) with Kyber Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyber Network Crystal has no effect on the direction of NEM i.e., NEM and Kyber Network go up and down completely randomly.

Pair Corralation between NEM and Kyber Network

Assuming the 90 days trading horizon NEM is expected to generate 0.86 times more return on investment than Kyber Network. However, NEM is 1.16 times less risky than Kyber Network. It trades about -0.19 of its potential returns per unit of risk. Kyber Network Crystal is currently generating about -0.18 per unit of risk. If you would invest  4.85  in NEM on January 19, 2024 and sell it today you would lose (1.30) from holding NEM or give up 26.8% of portfolio value over 90 days.

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

NEM  vs.  Kyber Network Crystal

NEM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for NEM shareholders.

Kyber Network Crystal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NEM and Kyber Network

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

The idea behind NEM and Kyber Network Crystal 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..