Correlation Between Applied Blockchain and 156700BD7

Can any of the company-specific risk be diversified away by investing in both Applied Blockchain and 156700BD7 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 156700BD7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Applied Blockchain and US156700BD72, you can compare the effects of market volatilities on Applied Blockchain and 156700BD7 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 156700BD7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Blockchain and 156700BD7.

Diversification Opportunities for Applied Blockchain and 156700BD7

0.25

Correlation Coefficient

Applied Blockchain  156700BD7

Modest diversification

The 3 months correlation between Applied and 156700BD7 is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Applied Blockchain and US156700BD72 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US156700BD72 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 156700BD7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US156700BD72 has no effect on the direction of Applied Blockchain i.e., Applied Blockchain and 156700BD7 go up and down completely randomly.

Pair Corralation between Applied Blockchain and 156700BD7

Given the investment horizon of 90 days Applied Blockchain is expected to generate 0.8 times more return on investment than 156700BD7. However, Applied Blockchain is 1.24 times less risky than 156700BD7. It trades about 0.14 of its potential returns per unit of risk. US156700BD72 is currently generating about -0.05 per unit of risk. If you would invest  581.00  in Applied Blockchain on September 17, 2024 and sell it today you would earn a total of  309.00  from holding Applied Blockchain or generate 53.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	86.15%
Values	Daily Returns

Applied Blockchain  vs.  US156700BD72

Applied Blockchain

Risk-Adjusted Performance

10 of 100

OK

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 weak essential indicators, Applied Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

US156700BD72

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US156700BD72 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for US156700BD72 investors.

Pair Trading with Applied Blockchain and 156700BD7

The main advantage of trading using opposite Applied Blockchain and 156700BD7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Blockchain position performs unexpectedly, 156700BD7 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 156700BD7 will offset losses from the drop in 156700BD7's long position.

The idea behind Applied Blockchain and US156700BD72 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.