Correlation Between Cardano and Celer Network

Can any of the company-specific risk be diversified away by investing in both Cardano and Celer Network 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 Celer Network into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cardano and Celer Network, you can compare the effects of market volatilities on Cardano and Celer Network 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 Celer Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and Celer Network.

Diversification Opportunities for Cardano and Celer Network

0.73

Correlation Coefficient

Cardano  Celer Network

Poor diversification

The 3 months correlation between Cardano and Celer is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Celer Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celer Network 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 Celer Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celer Network has no effect on the direction of Cardano i.e., Cardano and Celer Network go up and down completely randomly.

Pair Corralation between Cardano and Celer Network

Assuming the 90 days trading horizon Cardano is expected to under-perform the Celer Network. But the crypto coin apears to be less risky and, when comparing its historical volatility, Cardano is 1.29 times less risky than Celer Network. The crypto coin trades about -0.19 of its potential returns per unit of risk. The Celer Network is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  3.29  in Celer Network on January 26, 2024 and sell it today you would lose (0.57) from holding Celer Network or give up 17.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cardano  vs.  Celer Network

Cardano

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cardano may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Celer Network

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Celer Network are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Celer Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cardano and Celer Network

The main advantage of trading using opposite Cardano and Celer Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano position performs unexpectedly, Celer Network 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 Celer Network will offset losses from the drop in Celer Network's long position.

The idea behind Cardano and Celer Network 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.