Correlation Between Ondo and Celestia

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

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

Diversification Opportunities for Ondo and Celestia

-0.77

Correlation Coefficient

Ondo  Celestia

Pay attention - limited upside

The 3 months correlation between Ondo and Celestia is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ondo and Celestia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestia and Ondo 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 Ondo are associated (or correlated) with Celestia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestia has no effect on the direction of Ondo i.e., Ondo and Celestia go up and down completely randomly.

Pair Corralation between Ondo and Celestia

Assuming the 90 days trading horizon Ondo is expected to generate 1.29 times more return on investment than Celestia. However, Ondo is 1.29 times more volatile than Celestia. It trades about 0.24 of its potential returns per unit of risk. Celestia is currently generating about -0.13 per unit of risk. If you would invest  34.00  in Ondo on February 19, 2024 and sell it today you would earn a total of  65.00  from holding Ondo or generate 191.18% return on investment over 90 days.

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

Ondo  vs.  Celestia

Ondo

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ondo are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Ondo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Celestia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celestia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for Celestia shareholders.

Pair Trading with Ondo and Celestia

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

The idea behind Ondo and Celestia 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..