Correlation Between Toncoin and Sleepless

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

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

Diversification Opportunities for Toncoin and Sleepless

0.92

Correlation Coefficient

Toncoin  Sleepless

Almost no diversification

The 3 months correlation between Toncoin and Sleepless is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Toncoin and Sleepless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sleepless and Toncoin 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 Toncoin are associated (or correlated) with Sleepless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sleepless has no effect on the direction of Toncoin i.e., Toncoin and Sleepless go up and down completely randomly.

Pair Corralation between Toncoin and Sleepless

Assuming the 90 days trading horizon Toncoin is expected to generate 8.82 times less return on investment than Sleepless. But when comparing it to its historical volatility, Toncoin is 2.03 times less risky than Sleepless. It trades about 0.03 of its potential returns per unit of risk. Sleepless is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Sleepless on September 12, 2024 and sell it today you would earn a total of  22.00  from holding Sleepless or generate 55.0% return on investment over 90 days.

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

Toncoin  vs.  Sleepless

Toncoin

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Toncoin are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Toncoin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sleepless

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sleepless are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Sleepless exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toncoin and Sleepless

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

The idea behind Toncoin and Sleepless 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.