Correlation Between Cronos and CanSino Biologics

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

By analyzing existing cross correlation between Cronos Group and CanSino Biologics, you can compare the effects of market volatilities on Cronos and CanSino Biologics 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 Cronos with a short position of CanSino Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cronos and CanSino Biologics.

Diversification Opportunities for Cronos and CanSino Biologics

-0.74

Correlation Coefficient

Cronos  CanSino Biologics

Pay attention - limited upside

The 3 months correlation between Cronos and CanSino is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cronos Group and CanSino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanSino Biologics and Cronos 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 Cronos Group are associated (or correlated) with CanSino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanSino Biologics has no effect on the direction of Cronos i.e., Cronos and CanSino Biologics go up and down completely randomly.

Pair Corralation between Cronos and CanSino Biologics

Given the investment horizon of 90 days Cronos Group is expected to generate 0.85 times more return on investment than CanSino Biologics. However, Cronos Group is 1.18 times less risky than CanSino Biologics. It trades about 0.03 of its potential returns per unit of risk. CanSino Biologics is currently generating about 0.01 per unit of risk. If you would invest  200.00  in Cronos Group on October 9, 2024 and sell it today you would earn a total of  3.00  from holding Cronos Group or generate 1.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

Cronos Group  vs.  CanSino Biologics

Cronos Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cronos Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cronos is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CanSino Biologics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CanSino Biologics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, CanSino Biologics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cronos and CanSino Biologics

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

The idea behind Cronos Group and CanSino Biologics 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.