Correlation Between Cardio Diagnostics and Adagene

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

By analyzing existing cross correlation between Cardio Diagnostics Holdings and Adagene, you can compare the effects of market volatilities on Cardio Diagnostics and Adagene 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 Cardio Diagnostics with a short position of Adagene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardio Diagnostics and Adagene.

Diversification Opportunities for Cardio Diagnostics and Adagene

0.35

Correlation Coefficient

Cardio Diagnostics  Adagene

Weak diversification

The 3 months correlation between Cardio and Adagene is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cardio Diagnostics Holdings and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Cardio Diagnostics 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 Cardio Diagnostics Holdings are associated (or correlated) with Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Cardio Diagnostics i.e., Cardio Diagnostics and Adagene go up and down completely randomly.

Pair Corralation between Cardio Diagnostics and Adagene

Given the investment horizon of 90 days Cardio Diagnostics Holdings is expected to generate 1.49 times more return on investment than Adagene. However, Cardio Diagnostics is 1.49 times more volatile than Adagene. It trades about 0.05 of its potential returns per unit of risk. Adagene is currently generating about -0.02 per unit of risk. If you would invest  29.00  in Cardio Diagnostics Holdings on September 5, 2024 and sell it today you would earn a total of  1.00  from holding Cardio Diagnostics Holdings or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Cardio Diagnostics Holdings  vs.  Adagene

Cardio Diagnostics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cardio Diagnostics Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Cardio Diagnostics displayed solid returns over the last few months and may actually be approaching a breakup point.

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Cardio Diagnostics and Adagene

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

The idea behind Cardio Diagnostics Holdings and Adagene 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..