Correlation Between Crane and CDTi Advanced

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

By analyzing existing cross correlation between Crane Company and CDTi Advanced Materials, you can compare the effects of market volatilities on Crane and CDTi Advanced 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 Crane with a short position of CDTi Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and CDTi Advanced.

Diversification Opportunities for Crane and CDTi Advanced

0.0

Correlation Coefficient

Crane  CDTi Advanced

Pay attention - limited upside

The 3 months correlation between Crane and CDTi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and CDTi Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDTi Advanced Materials and Crane 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 Crane Company are associated (or correlated) with CDTi Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDTi Advanced Materials has no effect on the direction of Crane i.e., Crane and CDTi Advanced go up and down completely randomly.

Pair Corralation between Crane and CDTi Advanced

If you would invest  15,372  in Crane Company on December 27, 2024 and sell it today you would earn a total of  235.00  from holding Crane Company or generate 1.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Crane Company  vs.  CDTi Advanced Materials

Crane Company

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Crane is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

CDTi Advanced Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days CDTi Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CDTi Advanced is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Crane and CDTi Advanced

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

The idea behind Crane Company and CDTi Advanced Materials 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.