Correlation Between Cardano and Romcab SA

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

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

Diversification Opportunities for Cardano and Romcab SA

-0.1

Correlation Coefficient

Cardano  Romcab SA

Good diversification

The 3 months correlation between Cardano and Romcab is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Romcab SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romcab 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 Romcab SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romcab SA has no effect on the direction of Cardano i.e., Cardano and Romcab SA go up and down completely randomly.

Pair Corralation between Cardano and Romcab SA

Assuming the 90 days trading horizon Cardano is expected to generate 18.21 times less return on investment than Romcab SA. But when comparing it to its historical volatility, Cardano is 1.09 times less risky than Romcab SA. It trades about 0.08 of its potential returns per unit of risk. Romcab SA is currently generating about 1.28 of returns per unit of risk over similar time horizon. If you would invest  2.08  in Romcab SA on October 25, 2024 and sell it today you would earn a total of  4.62  from holding Romcab SA or generate 222.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

Cardano  vs.  Romcab SA

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.

Romcab SA

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Romcab SA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Romcab SA displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cardano and Romcab SA

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

The idea behind Cardano and Romcab 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.