Correlation Between ADEIA P and CoreCard Corp

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

By analyzing existing cross correlation between ADEIA P and CoreCard Corp, you can compare the effects of market volatilities on ADEIA P and CoreCard Corp 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 ADEIA P with a short position of CoreCard Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADEIA P and CoreCard Corp.

Diversification Opportunities for ADEIA P and CoreCard Corp

0.45

Correlation Coefficient

ADEIA P  CoreCard Corp

Very weak diversification

The 3 months correlation between ADEIA and CoreCard is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ADEIA P and CoreCard Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreCard Corp and ADEIA P 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 ADEIA P are associated (or correlated) with CoreCard Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreCard Corp has no effect on the direction of ADEIA P i.e., ADEIA P and CoreCard Corp go up and down completely randomly.

Pair Corralation between ADEIA P and CoreCard Corp

Given the investment horizon of 90 days ADEIA P is expected to under-perform the CoreCard Corp. But the stock apears to be less risky and, when comparing its historical volatility, ADEIA P is 4.68 times less risky than CoreCard Corp. The stock trades about -0.23 of its potential returns per unit of risk. The CoreCard Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,050  in CoreCard Corp on January 24, 2024 and sell it today you would earn a total of  171.00  from holding CoreCard Corp or generate 16.29% return on investment over 90 days.

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

ADEIA P  vs.  CoreCard Corp

ADEIA P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADEIA P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

CoreCard Corp

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with ADEIA P and CoreCard Corp

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

The idea behind ADEIA P and CoreCard Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.