Correlation Between Altlayer and Klaytn

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

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

Diversification Opportunities for Altlayer and Klaytn

0.64

Correlation Coefficient

Altlayer  Klaytn

Poor diversification

The 3 months correlation between Altlayer and Klaytn is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Altlayer and Klaytn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klaytn and Altlayer 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 Altlayer are associated (or correlated) with Klaytn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klaytn has no effect on the direction of Altlayer i.e., Altlayer and Klaytn go up and down completely randomly.

Pair Corralation between Altlayer and Klaytn

Assuming the 90 days trading horizon Altlayer is expected to under-perform the Klaytn. In addition to that, Altlayer is 1.11 times more volatile than Klaytn. It trades about -0.22 of its total potential returns per unit of risk. Klaytn is currently generating about -0.15 per unit of volatility. If you would invest  24.00  in Klaytn on January 30, 2024 and sell it today you would lose (5.00) from holding Klaytn or give up 20.83% of portfolio value over 90 days.

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

Altlayer  vs.  Klaytn

Altlayer

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Altlayer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Altlayer exhibited solid returns over the last few months and may actually be approaching a breakup point.

Klaytn

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Klaytn has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Klaytn may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Altlayer and Klaytn

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

The idea behind Altlayer and Klaytn 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.