Correlation Between Cardano and TNP Old

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

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

Diversification Opportunities for Cardano and TNP Old

0.95

Correlation Coefficient

Cardano  TNP Old

Almost no diversification

The 3 months correlation between Cardano and TNP is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and TNP Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TNP Old 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 TNP Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TNP Old has no effect on the direction of Cardano i.e., Cardano and TNP Old go up and down completely randomly.

Pair Corralation between Cardano and TNP Old

Assuming the 90 days trading horizon Cardano is expected to generate 2.9 times more return on investment than TNP Old. However, Cardano is 2.9 times more volatile than TNP Old. It trades about 0.1 of its potential returns per unit of risk. TNP Old is currently generating about 0.12 per unit of risk. If you would invest  46.00  in Cardano on October 11, 2024 and sell it today you would earn a total of  49.00  from holding Cardano or generate 106.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	93.37%
Values	Daily Returns

Cardano  vs.  TNP Old

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.

TNP Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TNP Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, TNP Old is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cardano and TNP Old

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

The idea behind Cardano and TNP Old 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.