Correlation Between PGE Corp and Cardano

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Can any of the company-specific risk be diversified away by investing in both PGE Corp and Cardano 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 PGE Corp and Cardano into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGE Corp and Cardano, you can compare the effects of market volatilities on PGE Corp and Cardano 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 PGE Corp with a short position of Cardano. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGE Corp and Cardano.

Diversification Opportunities for PGE Corp and Cardano

-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between PGE and Cardano is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding PGE Corp and Cardano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardano and PGE Corp 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 PGE Corp are associated (or correlated) with Cardano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardano has no effect on the direction of PGE Corp i.e., PGE Corp and Cardano go up and down completely randomly.

Pair Corralation between PGE Corp and Cardano

Considering the 90-day investment horizon PGE Corp is expected to generate 4.48 times less return on investment than Cardano. But when comparing it to its historical volatility, PGE Corp is 4.77 times less risky than Cardano. It trades about 0.04 of its potential returns per unit of risk. Cardano is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  63.00  in Cardano on December 29, 2023 and sell it today you would earn a total of  1.00  from holding Cardano or generate 1.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

PGE Corp  vs.  Cardano

 Performance 
       Timeline  
PGE Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days PGE Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Cardano 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cardano may actually be approaching a critical reversion point that can send shares even higher in April 2024.

PGE Corp and Cardano Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PGE Corp and Cardano

The main advantage of trading using opposite PGE Corp and Cardano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGE Corp position performs unexpectedly, Cardano 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 Cardano will offset losses from the drop in Cardano's long position.
The idea behind PGE Corp and Cardano 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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