Correlation Between Cardano and Otto Energy

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

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

Diversification Opportunities for Cardano and Otto Energy

-0.47

Correlation Coefficient

Cardano  Otto Energy

Very good diversification

The 3 months correlation between Cardano and Otto is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Otto Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otto Energy 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 Otto Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otto Energy has no effect on the direction of Cardano i.e., Cardano and Otto Energy go up and down completely randomly.

Pair Corralation between Cardano and Otto Energy

Assuming the 90 days trading horizon Cardano is expected to generate 1.17 times more return on investment than Otto Energy. However, Cardano is 1.17 times more volatile than Otto Energy. It trades about 0.02 of its potential returns per unit of risk. Otto Energy is currently generating about -0.05 per unit of risk. If you would invest  102.00  in Cardano on October 10, 2024 and sell it today you would lose (1.00) from holding Cardano or give up 0.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Cardano  vs.  Otto Energy

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.

Otto Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Otto Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Otto Energy is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cardano and Otto Energy

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

The idea behind Cardano and Otto Energy 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.