Correlation Between ARK and AdEx

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both ARK and AdEx 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 ARK and AdEx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARK and AdEx, you can compare the effects of market volatilities on ARK and AdEx 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 ARK with a short position of AdEx. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK and AdEx.

Diversification Opportunities for ARK and AdEx

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between ARK and AdEx is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ARK and AdEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdEx and ARK 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 ARK are associated (or correlated) with AdEx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdEx has no effect on the direction of ARK i.e., ARK and AdEx go up and down completely randomly.

Pair Corralation between ARK and AdEx

Assuming the 90 days trading horizon ARK is expected to under-perform the AdEx. But the crypto coin apears to be less risky and, when comparing its historical volatility, ARK is 1.7 times less risky than AdEx. The crypto coin trades about -0.09 of its potential returns per unit of risk. The AdEx is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  56.00  in AdEx on February 23, 2022 and sell it today you would lose (32.00)  from holding AdEx or give up 57.14% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

ARK  vs.  AdEx

 Performance (%) 
      Timeline 
ARK 
ARK Performance
0 of 100
Over the last 90 days ARK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for ARK investors.

ARK Price Channel

AdEx 
AdEx Performance
0 of 100
Over the last 90 days AdEx has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's fundamental indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for AdEx investors.

AdEx Price Channel

ARK and AdEx Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with ARK and AdEx

The main advantage of trading using opposite ARK and AdEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK position performs unexpectedly, AdEx 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 AdEx will offset losses from the drop in AdEx's long position.
The idea behind ARK and AdEx 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

Other Complementary Tools

Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Go
Positions Ratings
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
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Go
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Go