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Detailed Analysis of the First Correlation Table:
Here is the annual correlation analysis I conducted for the June 2024.
I usually don't publish this, but some people are interested in learning and those copying this strategy likely want to see how their funds are managed properly.
Anyway, I will rebalance the portfolio in a few hours once I finish my complete work as I prepare monthly reports for myself to review periodically.
in risk mode: Assets that have a higher return than the general market are selected. Then the risks are reduced.
Overview:
The first table presents the correlation between various assets, indicating how closely their price movements are related. High correlation (values close to 1) means the assets tend to move in the same direction, while low correlation (values close to 0) indicates more independent movements.
Key Observations:
Highly Correlated Assets
$SOL and $AVAX : High correlation of 82.58%.
$NEAR and $AVAX : High correlation of 81.20%.
$AR and $FET : High correlation of 87.21%.
,,etc
Low Correlation Assets:
$SOL and $JASMY : Low correlation of 21.68%.
$ICP and $AR : Low correlation of 26.20%.
$FET and $IMX : Low correlation of 50.50%.
,,etc
For diversification, it's beneficial to include assets with low correlations in your portfolio. This helps reduce overall risk.
Diversification Strategy:
Combining SOL and JASMY, ICP and AR, or FET and IMX could provide better risk management due to their low correlation.
Overall Assessment:
The selected assets to offer a good mix, but individual asset fundamentals and market trends should also be considered.
Diversifying with low-correlation assets is key to minimizing risk.
Therefore, the correlation will also be evaluated at the sector level.
Continue reading the next post :)
