Correlation Between Cronos and BankInvest Virksomhedsoblig

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

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

Diversification Opportunities for Cronos and BankInvest Virksomhedsoblig

0.6

Correlation Coefficient

Cronos  BankInvest Virksomhedsoblig

Poor diversification

The 3 months correlation between Cronos and BankInvest is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cronos Group and BankInvest Virksomhedsobliga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Virksomhedsoblig 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 Group are associated (or correlated) with BankInvest Virksomhedsoblig. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Virksomhedsoblig has no effect on the direction of Cronos i.e., Cronos and BankInvest Virksomhedsoblig go up and down completely randomly.

Pair Corralation between Cronos and BankInvest Virksomhedsoblig

Given the investment horizon of 90 days Cronos Group is expected to generate 11.79 times more return on investment than BankInvest Virksomhedsoblig. However, Cronos is 11.79 times more volatile than BankInvest Virksomhedsobligationer. It trades about 0.05 of its potential returns per unit of risk. BankInvest Virksomhedsobligationer is currently generating about 0.08 per unit of risk. If you would invest  188.00  in Cronos Group on January 19, 2024 and sell it today you would earn a total of  53.00  from holding Cronos Group or generate 28.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.13%
Values	Daily Returns

Cronos Group  vs.  BankInvest Virksomhedsobliga

Cronos Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cronos Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Cronos displayed solid returns over the last few months and may actually be approaching a breakup point.

BankInvest Virksomhedsoblig

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Virksomhedsobligationer are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, BankInvest Virksomhedsoblig is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cronos and BankInvest Virksomhedsoblig

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

The idea behind Cronos Group and BankInvest Virksomhedsobligationer 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.