Correlation Between Cardano and LeoNovus

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

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

Diversification Opportunities for Cardano and LeoNovus

0.0

Correlation Coefficient

Cardano  LeoNovus

Pay attention - limited upside

The 3 months correlation between Cardano and LeoNovus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and LeoNovus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LeoNovus 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 LeoNovus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LeoNovus has no effect on the direction of Cardano i.e., Cardano and LeoNovus go up and down completely randomly.

Pair Corralation between Cardano and LeoNovus

Assuming the 90 days trading horizon Cardano is expected to generate 1.03 times less return on investment than LeoNovus. But when comparing it to its historical volatility, Cardano is 1.97 times less risky than LeoNovus. It trades about 0.08 of its potential returns per unit of risk. LeoNovus is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5.00  in LeoNovus on October 11, 2024 and sell it today you would lose (1.00) from holding LeoNovus or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	60.12%
Values	Daily Returns

Cardano  vs.  LeoNovus

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.

LeoNovus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LeoNovus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, LeoNovus is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Cardano and LeoNovus

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

The idea behind Cardano and LeoNovus 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.