Correlation Between Cardano and Chiliz

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

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

Diversification Opportunities for Cardano and Chiliz

0.86

Correlation Coefficient

Cardano  Chiliz

Very poor diversification

The 3 months correlation between Cardano and Chiliz is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Chiliz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiliz 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 Chiliz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiliz has no effect on the direction of Cardano i.e., Cardano and Chiliz go up and down completely randomly.

Pair Corralation between Cardano and Chiliz

Assuming the 90 days trading horizon Cardano is expected to under-perform the Chiliz. But the crypto coin apears to be less risky and, when comparing its historical volatility, Cardano is 1.59 times less risky than Chiliz. The crypto coin trades about -0.25 of its potential returns per unit of risk. The Chiliz is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Chiliz on January 20, 2024 and sell it today you would lose (3.00) from holding Chiliz or give up 21.43% of portfolio value over 90 days.

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

Cardano  vs.  Chiliz

Cardano

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardano has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Cardano is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Chiliz

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chiliz are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Chiliz exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cardano and Chiliz

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

The idea behind Cardano and Chiliz 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.