Correlation Between Nervos Network and CEL

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

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

Diversification Opportunities for Nervos Network and CEL

0.28

Correlation Coefficient

Nervos Network  CEL

Modest diversification

The 3 months correlation between Nervos and CEL is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nervos Network and CEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEL and Nervos Network 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 Nervos Network are associated (or correlated) with CEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEL has no effect on the direction of Nervos Network i.e., Nervos Network and CEL go up and down completely randomly.

Pair Corralation between Nervos Network and CEL

Assuming the 90 days trading horizon Nervos Network is expected to generate 1.01 times more return on investment than CEL. However, Nervos Network is 1.01 times more volatile than CEL. It trades about 0.0 of its potential returns per unit of risk. CEL is currently generating about -0.18 per unit of risk. If you would invest  1.94  in Nervos Network on January 28, 2024 and sell it today you would lose (0.25) from holding Nervos Network or give up 12.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nervos Network  vs.  CEL

Nervos Network

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nervos Network are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Nervos Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

CEL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady essential indicators, CEL may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Nervos Network and CEL

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

The idea behind Nervos Network and CEL 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.