Correlation Between Crane and Greenland Acquisition

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

By analyzing existing cross correlation between Crane Company and Greenland Acquisition Corp, you can compare the effects of market volatilities on Crane and Greenland Acquisition 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 Greenland Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Greenland Acquisition.

Diversification Opportunities for Crane and Greenland Acquisition

0.33

Correlation Coefficient

Crane  Greenland Acquisition

Weak diversification

The 3 months correlation between Crane and Greenland is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Greenland Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenland Acquisition 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 Greenland Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenland Acquisition has no effect on the direction of Crane i.e., Crane and Greenland Acquisition go up and down completely randomly.

Pair Corralation between Crane and Greenland Acquisition

Allowing for the 90-day total investment horizon Crane Company is expected to generate 0.41 times more return on investment than Greenland Acquisition. However, Crane Company is 2.43 times less risky than Greenland Acquisition. It trades about -0.07 of its potential returns per unit of risk. Greenland Acquisition Corp is currently generating about -0.12 per unit of risk. If you would invest  18,098  in Crane Company on December 1, 2024 and sell it today you would lose (1,799) from holding Crane Company or give up 9.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Crane Company  vs.  Greenland Acquisition Corp

Crane Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crane Company has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Greenland Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greenland Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Crane and Greenland Acquisition

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

The idea behind Crane Company and Greenland Acquisition Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.