Correlation Between Crane and Natures Miracle

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

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

Diversification Opportunities for Crane and Natures Miracle

-0.31

Correlation Coefficient

Crane  Natures Miracle

Very good diversification

The 3 months correlation between Crane and Natures is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Natures Miracle Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natures Miracle Holding 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 Natures Miracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natures Miracle Holding has no effect on the direction of Crane i.e., Crane and Natures Miracle go up and down completely randomly.

Pair Corralation between Crane and Natures Miracle

Allowing for the 90-day total investment horizon Crane is expected to generate 13.5 times less return on investment than Natures Miracle. But when comparing it to its historical volatility, Crane Company is 27.62 times less risky than Natures Miracle. It trades about 0.13 of its potential returns per unit of risk. Natures Miracle Holding is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.85  in Natures Miracle Holding on October 26, 2024 and sell it today you would lose (0.94) from holding Natures Miracle Holding or give up 50.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.78%
Values	Daily Returns

Crane Company  vs.  Natures Miracle Holding

Crane Company

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Crane may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Natures Miracle Holding

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natures Miracle Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, Natures Miracle showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crane and Natures Miracle

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

The idea behind Crane Company and Natures Miracle Holding 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.