Correlation Between Cosmos and Cardano

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Can any of the company-specific risk be diversified away by investing in both Cosmos and Cardano 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 Cosmos and Cardano into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmos and Cardano, you can compare the effects of market volatilities on Cosmos and Cardano 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 Cosmos with a short position of Cardano. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmos and Cardano.

Diversification Opportunities for Cosmos and Cardano

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Cosmos and Cardano is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos and Cardano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardano and Cosmos 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 Cosmos are associated (or correlated) with Cardano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardano has no effect on the direction of Cosmos i.e., Cosmos and Cardano go up and down completely randomly.

Pair Corralation between Cosmos and Cardano

Assuming the 90 days trading horizon Cosmos is expected to generate 1.35 times more return on investment than Cardano. However, Cosmos is 1.35 times more volatile than Cardano. It trades about 0.25 of its potential returns per unit of risk. Cardano is currently generating about 0.2 per unit of risk. If you would invest  780.00  in Cosmos on May 12, 2022 and sell it today you would earn a total of  283.00  from holding Cosmos or generate 36.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Cosmos  vs.  Cardano

 Performance (%) 
       Timeline  
Cosmos 
Cosmos Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Cosmos are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cosmos sustained solid returns over the last few months and may actually be approaching a breakup point.

Cosmos Price Channel

Cardano 
Cardano Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Cardano may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Cardano Price Channel

Cosmos and Cardano Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cosmos and Cardano

The main advantage of trading using opposite Cosmos and Cardano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmos position performs unexpectedly, Cardano 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 Cardano will offset losses from the drop in Cardano's long position.
The idea behind Cosmos and Cardano 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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