Correlation Between Cardano and Oil Refineries

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

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

Diversification Opportunities for Cardano and Oil Refineries

0.33

Correlation Coefficient

Cardano  Oil Refineries

Weak diversification

The 3 months correlation between Cardano and Oil is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Oil Refineries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Refineries 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 Oil Refineries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Refineries has no effect on the direction of Cardano i.e., Cardano and Oil Refineries go up and down completely randomly.

Pair Corralation between Cardano and Oil Refineries

Assuming the 90 days trading horizon Cardano is expected to under-perform the Oil Refineries. In addition to that, Cardano is 3.32 times more volatile than Oil Refineries. It trades about -0.12 of its total potential returns per unit of risk. Oil Refineries is currently generating about 0.02 per unit of volatility. If you would invest  9,370  in Oil Refineries on October 12, 2024 and sell it today you would earn a total of  50.00  from holding Oil Refineries or generate 0.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.95%
Values	Daily Returns

Cardano  vs.  Oil Refineries

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.

Oil Refineries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Refineries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Oil Refineries is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cardano and Oil Refineries

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

The idea behind Cardano and Oil Refineries 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.