Correlation Between ZCash and Decred

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

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

Diversification Opportunities for ZCash and Decred

0.87

Correlation Coefficient

ZCash  Decred

Very poor diversification

The 3 months correlation between ZCash and Decred is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ZCash and Decred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decred and ZCash 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 ZCash are associated (or correlated) with Decred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decred has no effect on the direction of ZCash i.e., ZCash and Decred go up and down completely randomly.

Pair Corralation between ZCash and Decred

Assuming the 90 days trading horizon ZCash is expected to generate 1.77 times more return on investment than Decred. However, ZCash is 1.77 times more volatile than Decred. It trades about 0.25 of its potential returns per unit of risk. Decred is currently generating about 0.23 per unit of risk. If you would invest  2,960  in ZCash on September 3, 2024 and sell it today you would earn a total of  4,546  from holding ZCash or generate 153.58% return on investment over 90 days.

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

ZCash  vs.  Decred

ZCash

Risk-Adjusted Performance

19 of 100

Solid

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

Decred

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Decred are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Decred exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZCash and Decred

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

The idea behind ZCash and Decred 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.