Correlation Between Core and Ontology Gas

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

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

Diversification Opportunities for Core and Ontology Gas

0.71

Correlation Coefficient

Core  Ontology Gas

Poor diversification

The 3 months correlation between Core and Ontology is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Core and Ontology Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontology Gas and Core 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 Core are associated (or correlated) with Ontology Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontology Gas has no effect on the direction of Core i.e., Core and Ontology Gas go up and down completely randomly.

Pair Corralation between Core and Ontology Gas

Assuming the 90 days trading horizon Core is expected to generate 1.66 times more return on investment than Ontology Gas. However, Core is 1.66 times more volatile than Ontology Gas. It trades about 0.19 of its potential returns per unit of risk. Ontology Gas is currently generating about 0.2 per unit of risk. If you would invest  87.00  in Core on September 2, 2024 and sell it today you would earn a total of  110.00  from holding Core or generate 126.44% return on investment over 90 days.

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

Core  vs.  Ontology Gas

Core

Risk-Adjusted Performance

15 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Core are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Core exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ontology Gas

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ontology Gas are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Ontology Gas exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Core and Ontology Gas

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

The idea behind Core and Ontology Gas 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.