Correlation Between Cronos and WEMIX

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

By analyzing existing cross correlation between Cronos and WEMIX, you can compare the effects of market volatilities on Cronos and WEMIX 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 WEMIX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cronos and WEMIX.

Diversification Opportunities for Cronos and WEMIX

-0.23

Correlation Coefficient

Cronos  WEMIX

Very good diversification

The 3 months correlation between Cronos and WEMIX is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cronos and WEMIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEMIX 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 WEMIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEMIX has no effect on the direction of Cronos i.e., Cronos and WEMIX go up and down completely randomly.

Pair Corralation between Cronos and WEMIX

Assuming the 90 days trading horizon Cronos is expected to generate 1.01 times less return on investment than WEMIX. But when comparing it to its historical volatility, Cronos is 2.44 times less risky than WEMIX. It trades about 0.12 of its potential returns per unit of risk. WEMIX is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  68.00  in WEMIX on April 18, 2025 and sell it today you would earn a total of  0.00  from holding WEMIX or generate 0.0% return on investment over 90 days.

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

Cronos  vs.  WEMIX

Cronos

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cronos are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cronos exhibited solid returns over the last few months and may actually be approaching a breakup point.

WEMIX

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WEMIX are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, WEMIX exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cronos and WEMIX

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

The idea behind Cronos and WEMIX 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..