Correlation Between Cronos and OKB

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

Diversification Opportunities for Cronos and OKB

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Cronos and OKB is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cronos and OKB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OKB 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 OKB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OKB has no effect on the direction of Cronos i.e., Cronos and OKB go up and down completely randomly.

Pair Corralation between Cronos and OKB

Assuming the 90 days trading horizon Cronos is expected to under-perform the OKB. In addition to that, Cronos is 1.14 times more volatile than OKB. It trades about -0.02 of its total potential returns per unit of risk. OKB is currently generating about 0.07 per unit of volatility. If you would invest  1,967  in OKB on December 29, 2023 and sell it today you would earn a total of  4,381  from holding OKB or generate 222.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Cronos  vs.  OKB

 Performance 
       Timeline  
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.
OKB 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in OKB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, OKB exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cronos and OKB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cronos and OKB

The main advantage of trading using opposite Cronos and OKB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cronos position performs unexpectedly, OKB 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 OKB will offset losses from the drop in OKB's long position.
The idea behind Cronos and OKB 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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