LONG-TERM "HODL" ADVISE - Correlation Matters! 🚨

Altcoins are showing high correlations with Bitcoin (~ average of 0.69), indicating they move similarly, emphasizing Bitcoin's role as a market indicator. However, some altcoins exhibit weaker correlations, suggesting other factors influence their prices and returns.

HOW IT WORKS?

Correlation measures the strength of a linear relationship between two variables, ranging from 0 to 1. Assets with a correlation above 0.5 or below are considered to have strong positive/negative correlations. A close-to-zero correlation indicates no linear relationship. Positive correlation suggests similar movements in the same direction, while negative correlation implies opposite movements

WHY CORRELATION MATTERS?

It helps reduce overall portfolio risk. When you invest in assets that have low or negative correlations with each other, they tend to react differently to market events.

Assets with low or negative correlations can provide a buffer against losses. If one asset in your portfolio experiences a downturn, the others may not be affected or may even move in the opposite direction, helping to mitigate losses

PERSONAL ADVICE

When you build a Crypto Portfolio, try to find and add those tokens who have negative correlation. By this way, you protect (hedge) your long term investment portfolio!

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