Correlation Between ADX and Celer Network

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

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

Diversification Opportunities for ADX and Celer Network

0.84

Correlation Coefficient

ADX  Celer Network

Very poor diversification

The 3 months correlation between ADX and Celer is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ADX and Celer Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celer 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 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 ADX i.e., ADX and Celer Network go up and down completely randomly.

Pair Corralation between ADX and Celer Network

Assuming the 90 days trading horizon ADX is expected to under-perform the Celer Network. In addition to that, ADX is 1.07 times more volatile than Celer Network. It trades about -0.13 of its total potential returns per unit of risk. Celer Network is currently generating about -0.1 per unit of volatility. If you would invest  3.44  in Celer Network on January 25, 2024 and sell it today you would lose (0.66) from holding Celer Network or give up 19.19% of portfolio value over 90 days.

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

ADX  vs.  Celer Network

ADX

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADX are ranked lower than 6 (%) 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.

Celer Network

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Celer Network are ranked lower than 11 (%) 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 ADX and Celer Network

The main advantage of trading using opposite ADX and Celer Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADX 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 ADX 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.