Correlation Between Cardano and ADX

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Can any of the company-specific risk be diversified away by investing in both Cardano and ADX 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 ADX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardano and ADX, you can compare the effects of market volatilities on Cardano and ADX 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 ADX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and ADX.

Diversification Opportunities for Cardano and ADX

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Cardano and ADX is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and ADX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADX 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 ADX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADX has no effect on the direction of Cardano i.e., Cardano and ADX go up and down completely randomly.

Pair Corralation between Cardano and ADX

Assuming the 90 days trading horizon Cardano is expected to generate 2.64 times less return on investment than ADX. But when comparing it to its historical volatility, Cardano is 1.23 times less risky than ADX. It trades about 0.01 of its potential returns per unit of risk. ADX is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  38.00  in ADX on December 30, 2023 and sell it today you would lose (9.00) from holding ADX or give up 23.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Cardano  vs.  ADX

 Performance 
       Timeline  
Cardano 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cardano exhibited solid returns over the last few months and may actually be approaching a breakup point.
ADX 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in ADX are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ADX exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cardano and ADX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cardano and ADX

The main advantage of trading using opposite Cardano and ADX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano position performs unexpectedly, ADX 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 ADX will offset losses from the drop in ADX's long position.
The idea behind Cardano and ADX 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.
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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