Correlation Between ADX and Ankr Network

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

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

Diversification Opportunities for ADX and Ankr Network

0.91

Correlation Coefficient

ADX  Ankr Network

Almost no diversification

The 3 months correlation between ADX and Ankr is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ADX and Ankr Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ankr Network and ADX 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 ADX are associated (or correlated) with Ankr Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ankr Network has no effect on the direction of ADX i.e., ADX and Ankr Network go up and down completely randomly.

Pair Corralation between ADX and Ankr Network

Assuming the 90 days trading horizon ADX is expected to generate 2.16 times less return on investment than Ankr Network. But when comparing it to its historical volatility, ADX is 1.15 times less risky than Ankr Network. It trades about 0.04 of its potential returns per unit of risk. Ankr Network is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Ankr Network on January 26, 2024 and sell it today you would earn a total of  2.25  from holding Ankr Network or generate 75.0% return on investment over 90 days.

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

ADX  vs.  Ankr Network

ADX

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADX are ranked lower than 5 (%) 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.

Ankr Network

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ankr Network are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Ankr Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADX and Ankr Network

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

The idea behind ADX and Ankr 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.