Correlation Between Threshold Network and KEY

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

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

Diversification Opportunities for Threshold Network and KEY

-0.46

Correlation Coefficient

Threshold Network  KEY

Very good diversification

The 3 months correlation between Threshold and KEY is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Threshold Network Token and KEY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEY and Threshold Network 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 Threshold Network Token are associated (or correlated) with KEY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEY has no effect on the direction of Threshold Network i.e., Threshold Network and KEY go up and down completely randomly.

Pair Corralation between Threshold Network and KEY

Given the investment horizon of 90 days Threshold Network Token is expected to generate 0.66 times more return on investment than KEY. However, Threshold Network Token is 1.53 times less risky than KEY. It trades about 0.2 of its potential returns per unit of risk. KEY is currently generating about -0.14 per unit of risk. If you would invest  2.03  in Threshold Network Token on September 1, 2024 and sell it today you would earn a total of  1.39  from holding Threshold Network Token or generate 68.47% return on investment over 90 days.

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

Threshold Network Token  vs.  KEY

Threshold Network Token

Risk-Adjusted Performance

15 of 100

Good

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

KEY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEY 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 basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for KEY shareholders.

Pair Trading with Threshold Network and KEY

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

The idea behind Threshold Network Token and KEY 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.