Correlation Between CHESS and Golem Network

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

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

Diversification Opportunities for CHESS and Golem Network

0.66

Correlation Coefficient

CHESS  Golem Network

Poor diversification

The 3 months correlation between CHESS and Golem is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CHESS and Golem Network Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golem Network Token and CHESS 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 CHESS are associated (or correlated) with Golem Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golem Network Token has no effect on the direction of CHESS i.e., CHESS and Golem Network go up and down completely randomly.

Pair Corralation between CHESS and Golem Network

Assuming the 90 days trading horizon CHESS is expected to generate 1.57 times less return on investment than Golem Network. In addition to that, CHESS is 1.09 times more volatile than Golem Network Token. It trades about 0.11 of its total potential returns per unit of risk. Golem Network Token is currently generating about 0.18 per unit of volatility. If you would invest  27.00  in Golem Network Token on September 2, 2024 and sell it today you would earn a total of  23.00  from holding Golem Network Token or generate 85.19% return on investment over 90 days.

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

CHESS  vs.  Golem Network Token

CHESS

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CHESS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, CHESS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Golem Network Token

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Golem Network Token are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Golem Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHESS and Golem Network

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

The idea behind CHESS and Golem Network Token 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.