Correlation Between Crane and Roma Green

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

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

Diversification Opportunities for Crane and Roma Green

-0.42

Correlation Coefficient

Crane  Roma Green

Very good diversification

The 3 months correlation between Crane and Roma is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Roma Green Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roma Green Finance 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 Roma Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roma Green Finance has no effect on the direction of Crane i.e., Crane and Roma Green go up and down completely randomly.

Pair Corralation between Crane and Roma Green

Allowing for the 90-day total investment horizon Crane Company is expected to generate 0.3 times more return on investment than Roma Green. However, Crane Company is 3.31 times less risky than Roma Green. It trades about -0.12 of its potential returns per unit of risk. Roma Green Finance is currently generating about -0.1 per unit of risk. If you would invest  16,880  in Crane Company on October 6, 2024 and sell it today you would lose (1,368) from holding Crane Company or give up 8.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Crane Company  vs.  Roma Green Finance

Crane Company

Risk-Adjusted Performance

0 of 100

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 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.

Roma Green Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roma Green Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Crane and Roma Green

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

The idea behind Crane Company and Roma Green Finance 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 Positions Ratings module to 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.