Correlation Between Cronos and Cannabis Suisse

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

By analyzing existing cross correlation between Cronos Group and Cannabis Suisse Corp, you can compare the effects of market volatilities on Cronos and Cannabis Suisse 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 Cannabis Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cronos and Cannabis Suisse.

Diversification Opportunities for Cronos and Cannabis Suisse

-0.37

Correlation Coefficient

Cronos  Cannabis Suisse

Very good diversification

The 3 months correlation between Cronos and Cannabis is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cronos Group and Cannabis Suisse Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannabis Suisse Corp 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 Cannabis Suisse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannabis Suisse Corp has no effect on the direction of Cronos i.e., Cronos and Cannabis Suisse go up and down completely randomly.

Pair Corralation between Cronos and Cannabis Suisse

Given the investment horizon of 90 days Cronos is expected to generate 526.17 times less return on investment than Cannabis Suisse. But when comparing it to its historical volatility, Cronos Group is 21.01 times less risky than Cannabis Suisse. It trades about 0.01 of its potential returns per unit of risk. Cannabis Suisse Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1.25  in Cannabis Suisse Corp on October 5, 2024 and sell it today you would earn a total of  0.95  from holding Cannabis Suisse Corp or generate 76.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Cronos Group  vs.  Cannabis Suisse Corp

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.

Cannabis Suisse Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cannabis Suisse Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Cannabis Suisse demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cronos and Cannabis Suisse

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

The idea behind Cronos Group and Cannabis Suisse 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.