Correlation Between Toncoin and LUN

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

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

Diversification Opportunities for Toncoin and LUN

0.59

Correlation Coefficient

Toncoin  LUN

Very weak diversification

The 3 months correlation between Toncoin and LUN is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Toncoin and LUN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUN 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 LUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUN has no effect on the direction of Toncoin i.e., Toncoin and LUN go up and down completely randomly.

Pair Corralation between Toncoin and LUN

Assuming the 90 days trading horizon Toncoin is expected to generate 7.07 times less return on investment than LUN. In addition to that, Toncoin is 1.17 times more volatile than LUN. It trades about 0.03 of its total potential returns per unit of risk. LUN is currently generating about 0.24 per unit of volatility. If you would invest  1.27  in LUN on September 12, 2024 and sell it today you would earn a total of  0.76  from holding LUN or generate 59.84% return on investment over 90 days.

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

Toncoin  vs.  LUN

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.

LUN

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LUN are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, LUN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toncoin and LUN

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

The idea behind Toncoin and LUN 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.