Correlation Between Cosmos and Cronos
Can any of the company-specific risk be diversified away by investing in both Cosmos 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 Cosmos and Cronos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmos and Cronos, you can compare the effects of market volatilities on Cosmos 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 Cosmos with a short position of Cronos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmos and Cronos.
Diversification Opportunities for Cosmos and Cronos
Poor diversification
The 3 months correlation between Cosmos and Cronos is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos and Cronos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos and Cosmos 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 Cosmos 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 Cosmos i.e., Cosmos and Cronos go up and down completely randomly.
Pair Corralation between Cosmos and Cronos
Assuming the 90 days trading horizon Cosmos is expected to generate 1.22 times less return on investment than Cronos. In addition to that, Cosmos is 1.03 times more volatile than Cronos. It trades about 0.02 of its total potential returns per unit of risk. Cronos is currently generating about 0.03 per unit of volatility. If you would invest 12.00 in Cronos on January 25, 2024 and sell it today you would earn a total of 1.00 from holding Cronos or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cosmos vs. Cronos
Performance |
| Timeline |
| Cosmos |
| Cronos |
Cosmos and Cronos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosmos and Cronos
The main advantage of trading using opposite Cosmos and Cronos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmos 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 Cosmos 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Stocks Directory Find actively traded stocks across global markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |