Correlation Between Cardano and AST

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

Diversification Opportunities for Cardano and AST

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Cardano and AST is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and AST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AST 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 AST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AST has no effect on the direction of Cardano i.e., Cardano and AST go up and down completely randomly.

Pair Corralation between Cardano and AST

Assuming the 90 days trading horizon Cardano is expected to generate 47.31 times less return on investment than AST. But when comparing it to its historical volatility, Cardano is 2.63 times less risky than AST. It trades about 0.01 of its potential returns per unit of risk. AST is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  11.00  in AST on December 30, 2023 and sell it today you would earn a total of  7.00  from holding AST or generate 63.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Cardano  vs.  AST

 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.
AST 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in AST are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, AST exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cardano and AST Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cardano and AST

The main advantage of trading using opposite Cardano and AST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano position performs unexpectedly, AST 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 AST will offset losses from the drop in AST's long position.
The idea behind Cardano and AST 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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