Correlation Between Cardano and Cannlabs

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

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

Diversification Opportunities for Cardano and Cannlabs

-0.71

Correlation Coefficient

Cardano  Cannlabs

Pay attention - limited upside

The 3 months correlation between Cardano and Cannlabs is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Cannlabs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannlabs 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 Cannlabs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannlabs has no effect on the direction of Cardano i.e., Cardano and Cannlabs go up and down completely randomly.

Pair Corralation between Cardano and Cannlabs

If you would invest  0.01  in Cannlabs on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Cannlabs or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Cardano  vs.  Cannlabs

Cardano

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 19 (%) 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.

Cannlabs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cannlabs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite weak basic indicators, Cannlabs may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cardano and Cannlabs

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

The idea behind Cardano and Cannlabs 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.