Correlation Between AERGO and Celer Network

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

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

Diversification Opportunities for AERGO and Celer Network

0.9

Correlation Coefficient

AERGO  Celer Network

Almost no diversification

The 3 months correlation between AERGO and Celer is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding AERGO and Celer Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celer Network and AERGO 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 AERGO 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 AERGO i.e., AERGO and Celer Network go up and down completely randomly.

Pair Corralation between AERGO and Celer Network

Assuming the 90 days trading horizon AERGO is expected to under-perform the Celer Network. In addition to that, AERGO is 1.4 times more volatile than Celer Network. It trades about -0.1 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 24, 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	Very Strong
Accuracy	100.0%
Values	Daily Returns

AERGO  vs.  Celer Network

AERGO

Risk-Adjusted Performance

4 of 100

Insignificant

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

Celer Network

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Celer Network are ranked lower than 13 (%) 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 AERGO and Celer Network

The main advantage of trading using opposite AERGO and Celer Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AERGO 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 AERGO 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.