Correlation Between Ethereum and ADES Old

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

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

Diversification Opportunities for Ethereum and ADES Old

-0.11

Correlation Coefficient

Ethereum  ADES Old

Good diversification

The 3 months correlation between Ethereum and ADES is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and ADES Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADES Old and Ethereum 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 Ethereum are associated (or correlated) with ADES Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADES Old has no effect on the direction of Ethereum i.e., Ethereum and ADES Old go up and down completely randomly.

Pair Corralation between Ethereum and ADES Old

Assuming the 90 days trading horizon Ethereum is expected to generate 1.02 times more return on investment than ADES Old. However, Ethereum is 1.02 times more volatile than ADES Old. It trades about 0.06 of its potential returns per unit of risk. ADES Old is currently generating about 0.01 per unit of risk. If you would invest  162,668  in Ethereum on October 11, 2024 and sell it today you would earn a total of  159,293  from holding Ethereum or generate 97.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.95%
Values	Daily Returns

Ethereum  vs.  ADES Old

Ethereum

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Ethereum exhibited solid returns over the last few months and may actually be approaching a breakup point.

ADES Old

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ethereum and ADES Old

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

The idea behind Ethereum and ADES 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.