Correlation Between DKargo and Cronos

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

Diversification Opportunities for DKargo and Cronos

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between DKargo and Cronos is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding dKargo and Cronos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos and DKargo 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 dKargo are associated (or correlated) with Cronos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cronos has no effect on the direction of DKargo i.e., DKargo and Cronos go up and down completely randomly.

Pair Corralation between DKargo and Cronos

Assuming the 90 days trading horizon DKargo is expected to generate 4.28 times less return on investment than Cronos. But when comparing it to its historical volatility, dKargo is 1.0 times less risky than Cronos. It trades about 0.06 of its potential returns per unit of risk. Cronos is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Cronos on December 29, 2023 and sell it today you would earn a total of  5.00  from holding Cronos or generate 50.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

dKargo  vs.  Cronos

 Performance 
       Timeline  
dKargo 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in dKargo are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, DKargo exhibited solid returns over the last few months and may actually be approaching a breakup point.
Cronos 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Cronos are ranked lower than 11 (%) 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.

DKargo and Cronos Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DKargo and Cronos

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

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