Correlation Between Cardano and Elite Material
Can any of the company-specific risk be diversified away by investing in both Cardano and Elite Material 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 Cardano and Elite Material into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardano and Elite Material Co, you can compare the effects of market volatilities on Cardano and Elite Material 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 Cardano with a short position of Elite Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and Elite Material.
Diversification Opportunities for Cardano and Elite Material
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cardano and Elite is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Elite Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Material and Cardano 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 Cardano are associated (or correlated) with Elite Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Material has no effect on the direction of Cardano i.e., Cardano and Elite Material go up and down completely randomly.
Pair Corralation between Cardano and Elite Material
Assuming the 90 days trading horizon Cardano is expected to generate 2.68 times more return on investment than Elite Material. However, Cardano is 2.68 times more volatile than Elite Material Co. It trades about 0.21 of its potential returns per unit of risk. Elite Material Co is currently generating about 0.02 per unit of risk. If you would invest 90.00 in Cardano on October 21, 2024 and sell it today you would earn a total of 24.00 from holding Cardano or generate 26.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardano vs. Elite Material Co
Performance |
| Timeline |
| Cardano |
| Elite Material |
Cardano and Elite Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardano and Elite Material
The main advantage of trading using opposite Cardano and Elite Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano position performs unexpectedly, Elite Material 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 Elite Material will offset losses from the drop in Elite Material's long position.The idea behind Cardano and Elite Material Co 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.| Elite Material vs. Compeq Manufacturing Co | Elite Material vs. ITEQ Corp | Elite Material vs. Unimicron Technology Corp | Elite Material vs. Chicony Electronics Co |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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