Correlation Between HOT and Origin Protocol

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

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

Diversification Opportunities for HOT and Origin Protocol

0.96

Correlation Coefficient

HOT  Origin Protocol

Almost no diversification

The 3 months correlation between HOT and Origin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding HOT and Origin Protocol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Protocol and HOT 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 HOT are associated (or correlated) with Origin Protocol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Protocol has no effect on the direction of HOT i.e., HOT and Origin Protocol go up and down completely randomly.

Pair Corralation between HOT and Origin Protocol

Assuming the 90 days trading horizon HOT is expected to generate 1.09 times more return on investment than Origin Protocol. However, HOT is 1.09 times more volatile than Origin Protocol. It trades about 0.24 of its potential returns per unit of risk. Origin Protocol is currently generating about 0.19 per unit of risk. If you would invest  0.16  in HOT on September 3, 2024 and sell it today you would earn a total of  0.18  from holding HOT or generate 117.98% return on investment over 90 days.

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

HOT  vs.  Origin Protocol

HOT

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HOT are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, HOT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Origin Protocol

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with HOT and Origin Protocol

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

The idea behind HOT and Origin Protocol 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.