Correlation Between Concordium and DeepBook Protocol

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

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

Diversification Opportunities for Concordium and DeepBook Protocol

0.38

Correlation Coefficient

Concordium  DeepBook Protocol

Weak diversification

The 3 months correlation between Concordium and DeepBook is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Concordium and DeepBook Protocol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DeepBook Protocol and Concordium 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 Concordium are associated (or correlated) with DeepBook Protocol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DeepBook Protocol has no effect on the direction of Concordium i.e., Concordium and DeepBook Protocol go up and down completely randomly.

Pair Corralation between Concordium and DeepBook Protocol

Assuming the 90 days trading horizon Concordium is expected to generate 3.24 times more return on investment than DeepBook Protocol. However, Concordium is 3.24 times more volatile than DeepBook Protocol. It trades about 0.1 of its potential returns per unit of risk. DeepBook Protocol is currently generating about 0.01 per unit of risk. If you would invest  0.48  in Concordium on May 1, 2025 and sell it today you would earn a total of  0.26  from holding Concordium or generate 54.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Concordium  vs.  DeepBook Protocol

Concordium

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Concordium are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Concordium exhibited solid returns over the last few months and may actually be approaching a breakup point.

DeepBook Protocol

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Concordium and DeepBook Protocol

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

The idea behind Concordium and DeepBook Protocol 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.