Correlation Between Cardano and Hamilton MidSmall

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

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

Diversification Opportunities for Cardano and Hamilton MidSmall

0.8

Correlation Coefficient

Cardano  Hamilton MidSmall

Very poor diversification

The 3 months correlation between Cardano and Hamilton is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Hamilton MidSmall Cap Financia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton MidSmall Cap 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 Hamilton MidSmall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton MidSmall Cap has no effect on the direction of Cardano i.e., Cardano and Hamilton MidSmall go up and down completely randomly.

Pair Corralation between Cardano and Hamilton MidSmall

Assuming the 90 days trading horizon Cardano is expected to generate 4.79 times more return on investment than Hamilton MidSmall. However, Cardano is 4.79 times more volatile than Hamilton MidSmall Cap Financials. It trades about 0.23 of its potential returns per unit of risk. Hamilton MidSmall Cap Financials is currently generating about 0.02 per unit of risk. If you would invest  36.00  in Cardano on October 12, 2024 and sell it today you would earn a total of  55.00  from holding Cardano or generate 152.78% return on investment over 90 days.

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

Cardano  vs.  Hamilton MidSmall Cap Financia

Cardano

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 18 (%) 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.

Hamilton MidSmall Cap

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton MidSmall Cap Financials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hamilton MidSmall is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cardano and Hamilton MidSmall

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

The idea behind Cardano and Hamilton MidSmall Cap Financials 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.