Correlation Between Cardano and LEO LITHIUM

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

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

Diversification Opportunities for Cardano and LEO LITHIUM

0.0

Correlation Coefficient

Cardano  LEO LITHIUM

Pay attention - limited upside

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

Pair Corralation between Cardano and LEO LITHIUM

If you would invest  34.00  in Cardano on October 9, 2024 and sell it today you would earn a total of  75.00  from holding Cardano or generate 220.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Cardano  vs.  LEO LITHIUM LTD

Cardano

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 22 (%) 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.

LEO LITHIUM LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LEO LITHIUM LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LEO LITHIUM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cardano and LEO LITHIUM

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

The idea behind Cardano and LEO LITHIUM LTD 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.