Correlation Between Applied Blockchain and Stonex

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

Diversification Opportunities for Applied Blockchain and Stonex

0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between Applied and Stonex is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Applied Blockchain and Stonex Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stonex Group and Applied Blockchain 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 Applied Blockchain are associated (or correlated) with Stonex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stonex Group has no effect on the direction of Applied Blockchain i.e., Applied Blockchain and Stonex go up and down completely randomly.

Pair Corralation between Applied Blockchain and Stonex

Given the investment horizon of 90 days Applied Blockchain is expected to generate 3.47 times more return on investment than Stonex. However, Applied Blockchain is 3.47 times more volatile than Stonex Group. It trades about 0.13 of its potential returns per unit of risk. Stonex Group is currently generating about 0.29 per unit of risk. If you would invest  710.00  in Applied Blockchain on September 5, 2024 and sell it today you would earn a total of  216.00  from holding Applied Blockchain or generate 30.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Applied Blockchain  vs.  Stonex Group

 Performance 
       Timeline  
Applied Blockchain 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Applied Blockchain are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.
Stonex Group 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Stonex Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Stonex showed solid returns over the last few months and may actually be approaching a breakup point.

Applied Blockchain and Stonex Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Applied Blockchain and Stonex

The main advantage of trading using opposite Applied Blockchain and Stonex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Blockchain position performs unexpectedly, Stonex 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 Stonex will offset losses from the drop in Stonex's long position.
The idea behind Applied Blockchain and Stonex Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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