Correlation Between Cardano and Auna SA

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

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

Diversification Opportunities for Cardano and Auna SA

0.03

Correlation Coefficient

Cardano  Auna SA

Significant diversification

The 3 months correlation between Cardano and Auna is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Auna SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auna SA and Cardano 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 Cardano are associated (or correlated) with Auna SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auna SA has no effect on the direction of Cardano i.e., Cardano and Auna SA go up and down completely randomly.

Pair Corralation between Cardano and Auna SA

Assuming the 90 days trading horizon Cardano is expected to generate 2.21 times more return on investment than Auna SA. However, Cardano is 2.21 times more volatile than Auna SA. It trades about 0.12 of its potential returns per unit of risk. Auna SA is currently generating about -0.05 per unit of risk. If you would invest  46.00  in Cardano on October 9, 2024 and sell it today you would earn a total of  63.00  from holding Cardano or generate 136.96% return on investment over 90 days.

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

Cardano  vs.  Auna SA

Cardano

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cardano exhibited solid returns over the last few months and may actually be approaching a breakup point.

Auna SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Auna SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Auna SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cardano and Auna SA

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

The idea behind Cardano and Auna SA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.