Correlation Between MONA and Altlayer

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

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

Diversification Opportunities for MONA and Altlayer

0.53

Correlation Coefficient

MONA  Altlayer

Very weak diversification

The 3 months correlation between MONA and Altlayer is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding MONA and Altlayer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altlayer and MONA 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 MONA are associated (or correlated) with Altlayer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altlayer has no effect on the direction of MONA i.e., MONA and Altlayer go up and down completely randomly.

Pair Corralation between MONA and Altlayer

Assuming the 90 days trading horizon MONA is expected to generate 0.6 times more return on investment than Altlayer. However, MONA is 1.66 times less risky than Altlayer. It trades about -0.11 of its potential returns per unit of risk. Altlayer is currently generating about -0.22 per unit of risk. If you would invest  38.00  in MONA on January 30, 2024 and sell it today you would lose (4.00) from holding MONA or give up 10.53% of portfolio value over 90 days.

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

MONA  vs.  Altlayer

MONA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MONA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MONA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Altlayer

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altlayer are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Altlayer exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MONA and Altlayer

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

The idea behind MONA and Altlayer 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.