Correlation Between Flexion Therapeutics and Cronos

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

By analyzing existing cross correlation between Flexion Therapeutics and Cronos Group, you can compare the effects of market volatilities on Flexion Therapeutics 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 Flexion Therapeutics with a short position of Cronos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexion Therapeutics and Cronos.

Diversification Opportunities for Flexion Therapeutics and Cronos

0.0

Correlation Coefficient

Flexion Therapeutics  Cronos

Pay attention - limited upside

The 3 months correlation between Flexion and Cronos is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Flexion Therapeutics and Cronos Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos Group and Flexion Therapeutics 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 Flexion Therapeutics 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 Group has no effect on the direction of Flexion Therapeutics i.e., Flexion Therapeutics and Cronos go up and down completely randomly.

Pair Corralation between Flexion Therapeutics and Cronos

If you would invest  223.00  in Cronos Group on January 17, 2024 and sell it today you would earn a total of  21.00  from holding Cronos Group or generate 9.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Flexion Therapeutics  vs.  Cronos Group

Flexion Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flexion Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Flexion Therapeutics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Flexion Therapeutics and Cronos

The main advantage of trading using opposite Flexion Therapeutics and Cronos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexion Therapeutics 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 Flexion Therapeutics and Cronos Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.