Correlation Between Cardano and DeNA

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

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

Diversification Opportunities for Cardano and DeNA

0.49

Correlation Coefficient

Cardano  DeNA

Very weak diversification

The 3 months correlation between Cardano and DeNA is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and DeNA Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DeNA 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 DeNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DeNA has no effect on the direction of Cardano i.e., Cardano and DeNA go up and down completely randomly.

Pair Corralation between Cardano and DeNA

Assuming the 90 days trading horizon Cardano is expected to generate 1.05 times more return on investment than DeNA. However, Cardano is 1.05 times more volatile than DeNA Co. It trades about 0.26 of its potential returns per unit of risk. DeNA Co is currently generating about 0.1 per unit of risk. If you would invest  33.00  in Cardano on October 25, 2024 and sell it today you would earn a total of  65.00  from holding Cardano or generate 196.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Cardano  vs.  DeNA Co

Cardano

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 20 (%) 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.

DeNA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DeNA Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, DeNA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cardano and DeNA

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

The idea behind Cardano and DeNA Co 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.