Correlation Between VeChain and Golem Network

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

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

Diversification Opportunities for VeChain and Golem Network

0.91

Correlation Coefficient

VeChain  Golem Network

Almost no diversification

The 3 months correlation between VeChain and Golem is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding VeChain and Golem Network Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golem Network Token and VeChain 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 VeChain are associated (or correlated) with Golem Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golem Network Token has no effect on the direction of VeChain i.e., VeChain and Golem Network go up and down completely randomly.

Pair Corralation between VeChain and Golem Network

Assuming the 90 days trading horizon VeChain is expected to generate 0.93 times more return on investment than Golem Network. However, VeChain is 1.08 times less risky than Golem Network. It trades about 0.24 of its potential returns per unit of risk. Golem Network Token is currently generating about 0.18 per unit of risk. If you would invest  2.08  in VeChain on September 2, 2024 and sell it today you would earn a total of  2.51  from holding VeChain or generate 120.67% return on investment over 90 days.

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

VeChain  vs.  Golem Network Token

VeChain

Risk-Adjusted Performance

19 of 100

Solid

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

Golem Network Token

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Golem Network Token are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Golem Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VeChain and Golem Network

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

The idea behind VeChain and Golem Network Token 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.