Correlation Between Chainlink and Dymension

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

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

Diversification Opportunities for Chainlink and Dymension

0.78

Correlation Coefficient

Chainlink  Dymension

Poor diversification

The 3 months correlation between Chainlink and Dymension is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and Dymension in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dymension and Chainlink 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 Chainlink are associated (or correlated) with Dymension. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dymension has no effect on the direction of Chainlink i.e., Chainlink and Dymension go up and down completely randomly.

Pair Corralation between Chainlink and Dymension

Assuming the 90 days trading horizon Chainlink is expected to generate 0.85 times more return on investment than Dymension. However, Chainlink is 1.17 times less risky than Dymension. It trades about 0.26 of its potential returns per unit of risk. Dymension is currently generating about 0.18 per unit of risk. If you would invest  1,033  in Chainlink on September 3, 2024 and sell it today you would earn a total of  1,463  from holding Chainlink or generate 141.63% return on investment over 90 days.

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

Chainlink  vs.  Dymension

Chainlink

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chainlink are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Chainlink exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dymension

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with Chainlink and Dymension

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

The idea behind Chainlink and Dymension 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..