Correlation Between Laboratory and Cronos
Can any of the company-specific risk be diversified away by investing in both Laboratory 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 Laboratory and Cronos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laboratory of and Cronos Group, you can compare the effects of market volatilities on Laboratory 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 Laboratory with a short position of Cronos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laboratory and Cronos.
Diversification Opportunities for Laboratory and Cronos
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Laboratory and Cronos is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Cronos Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos Group and Laboratory 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 Laboratory of 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 Laboratory i.e., Laboratory and Cronos go up and down completely randomly.
Pair Corralation between Laboratory and Cronos
Allowing for the 90-day total investment horizon Laboratory of is expected to generate 0.78 times more return on investment than Cronos. However, Laboratory of is 1.29 times less risky than Cronos. It trades about 0.45 of its potential returns per unit of risk. Cronos Group is currently generating about -0.31 per unit of risk. If you would invest 22,819 in Laboratory of on November 3, 2024 and sell it today you would earn a total of 2,161 from holding Laboratory of or generate 9.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laboratory of vs. Cronos Group
Performance |
| Timeline |
| Laboratory |
| Cronos Group |
Laboratory and Cronos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laboratory and Cronos
The main advantage of trading using opposite Laboratory and Cronos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laboratory 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.| Laboratory vs. Quest Diagnostics Incorporated | Laboratory vs. Waters | Laboratory vs. Universal Health Services | Laboratory vs. Humana Inc |
| Cronos vs. OrganiGram Holdings | Cronos vs. Aurora Cannabis | Cronos vs. SNDL Inc | Cronos vs. Canopy Growth Corp |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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