Correlation Between Toncoin and LOOM

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

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

Diversification Opportunities for Toncoin and LOOM

0.81

Correlation Coefficient

Toncoin  LOOM

Very poor diversification

The 3 months correlation between Toncoin and LOOM is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Toncoin and LOOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOOM 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 LOOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOOM has no effect on the direction of Toncoin i.e., Toncoin and LOOM go up and down completely randomly.

Pair Corralation between Toncoin and LOOM

Assuming the 90 days trading horizon Toncoin is expected to generate 8.19 times less return on investment than LOOM. But when comparing it to its historical volatility, Toncoin is 2.1 times less risky than LOOM. It trades about 0.03 of its potential returns per unit of risk. LOOM is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4.60  in LOOM on September 12, 2024 and sell it today you would earn a total of  2.24  from holding LOOM or generate 48.7% return on investment over 90 days.

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

Toncoin  vs.  LOOM

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.

LOOM

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LOOM are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, LOOM exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toncoin and LOOM

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

The idea behind Toncoin and LOOM 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..