Correlation Between 21Shares Polkadot and Air France

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Can any of the company-specific risk be diversified away by investing in both 21Shares Polkadot and Air France 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 21Shares Polkadot and Air France into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 21Shares Polkadot ETP and Air France KLM SA, you can compare the effects of market volatilities on 21Shares Polkadot and Air France 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 21Shares Polkadot with a short position of Air France. Check out your portfolio center. Please also check ongoing floating volatility patterns of 21Shares Polkadot and Air France.

Diversification Opportunities for 21Shares Polkadot and Air France

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between 21Shares and Air is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Polkadot ETP and Air France KLM SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air France KLM and 21Shares Polkadot 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 21Shares Polkadot ETP are associated (or correlated) with Air France. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air France KLM has no effect on the direction of 21Shares Polkadot i.e., 21Shares Polkadot and Air France go up and down completely randomly.

Pair Corralation between 21Shares Polkadot and Air France

Assuming the 90 days trading horizon 21Shares Polkadot ETP is expected to generate 2.32 times more return on investment than Air France. However, 21Shares Polkadot is 2.32 times more volatile than Air France KLM SA. It trades about 0.26 of its potential returns per unit of risk. Air France KLM SA is currently generating about -0.05 per unit of risk. If you would invest  180.00  in 21Shares Polkadot ETP on September 6, 2024 and sell it today you would earn a total of  279.00  from holding 21Shares Polkadot ETP or generate 155.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy98.46%
ValuesDaily Returns

21Shares Polkadot ETP  vs.  Air France KLM SA

 Performance 
       Timeline  
21Shares Polkadot ETP 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Polkadot ETP are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 21Shares Polkadot sustained solid returns over the last few months and may actually be approaching a breakup point.
Air France KLM 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Air France KLM SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

21Shares Polkadot and Air France Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 21Shares Polkadot and Air France

The main advantage of trading using opposite 21Shares Polkadot and Air France positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 21Shares Polkadot position performs unexpectedly, Air France 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 Air France will offset losses from the drop in Air France's long position.
The idea behind 21Shares Polkadot ETP and Air France KLM SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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