Correlation Between Cronos and CyberConnect
Can any of the company-specific risk be diversified away by investing in both Cronos and CyberConnect 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 Cronos and CyberConnect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cronos and CyberConnect, you can compare the effects of market volatilities on Cronos and CyberConnect 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 Cronos with a short position of CyberConnect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cronos and CyberConnect.
Diversification Opportunities for Cronos and CyberConnect
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cronos and CyberConnect is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cronos and CyberConnect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberConnect and Cronos 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 Cronos are associated (or correlated) with CyberConnect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberConnect has no effect on the direction of Cronos i.e., Cronos and CyberConnect go up and down completely randomly.
Pair Corralation between Cronos and CyberConnect
Assuming the 90 days trading horizon Cronos is expected to generate 1.34 times less return on investment than CyberConnect. But when comparing it to its historical volatility, Cronos is 1.45 times less risky than CyberConnect. It trades about 0.12 of its potential returns per unit of risk. CyberConnect is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 128.00 in CyberConnect on April 21, 2025 and sell it today you would earn a total of 47.00 from holding CyberConnect or generate 36.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Cronos vs. CyberConnect
Performance |
Timeline |
Cronos |
CyberConnect |
Cronos and CyberConnect Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cronos and CyberConnect
The main advantage of trading using opposite Cronos and CyberConnect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cronos position performs unexpectedly, CyberConnect 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 CyberConnect will offset losses from the drop in CyberConnect's long position.The idea behind Cronos and CyberConnect 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 the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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