Correlation Between NPXS and Chia

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

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

Diversification Opportunities for NPXS and Chia

-0.4

Correlation Coefficient

NPXS  Chia

Very good diversification

The 3 months correlation between NPXS and Chia is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding NPXS and Chia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia and NPXS 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 NPXS are associated (or correlated) with Chia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia has no effect on the direction of NPXS i.e., NPXS and Chia go up and down completely randomly.

Pair Corralation between NPXS and Chia

Assuming the 90 days trading horizon NPXS is expected to under-perform the Chia. But the crypto coin apears to be less risky and, when comparing its historical volatility, NPXS is 1.23 times less risky than Chia. The crypto coin trades about -0.12 of its potential returns per unit of risk. The Chia is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,325  in Chia on September 2, 2024 and sell it today you would earn a total of  1,643  from holding Chia or generate 124.0% return on investment over 90 days.

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

NPXS  vs.  Chia

NPXS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NPXS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for NPXS shareholders.

Chia

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chia are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Chia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NPXS and Chia

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

The idea behind NPXS and Chia 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.