Correlation Between Cronos and TRON
Can any of the company-specific risk be diversified away by investing in both Cronos and TRON 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 TRON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cronos and TRON, you can compare the effects of market volatilities on Cronos and TRON 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 TRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cronos and TRON.
Diversification Opportunities for Cronos and TRON
Almost no diversification
The 3 months correlation between Cronos and TRON is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cronos and TRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRON 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 TRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRON has no effect on the direction of Cronos i.e., Cronos and TRON go up and down completely randomly.
Pair Corralation between Cronos and TRON
Assuming the 90 days trading horizon Cronos is expected to generate 2.99 times more return on investment than TRON. However, Cronos is 2.99 times more volatile than TRON. It trades about 0.16 of its potential returns per unit of risk. TRON is currently generating about 0.14 per unit of risk. If you would invest 7.87 in Cronos on August 31, 2024 and sell it today you would earn a total of 10.13 from holding Cronos or generate 128.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cronos vs. TRON
Performance |
| Timeline |
| Cronos |
| TRON |
Cronos and TRON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cronos and TRON
The main advantage of trading using opposite Cronos and TRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cronos position performs unexpectedly, TRON 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 TRON will offset losses from the drop in TRON's long position.The idea behind Cronos and TRON 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |