Correlation Between Alpha Tau and Cronos

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

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

Diversification Opportunities for Alpha Tau and Cronos

-0.71

Correlation Coefficient

Alpha Tau  Cronos

Pay attention - limited upside

The 3 months correlation between Alpha and Cronos is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Tau Medical and Cronos Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos Group and Alpha Tau 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 Alpha Tau Medical are associated (or correlated) with Cronos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cronos Group has no effect on the direction of Alpha Tau i.e., Alpha Tau and Cronos go up and down completely randomly.

Pair Corralation between Alpha Tau and Cronos

Given the investment horizon of 90 days Alpha Tau Medical is expected to generate 2.3 times more return on investment than Cronos. However, Alpha Tau is 2.3 times more volatile than Cronos Group. It trades about 0.38 of its potential returns per unit of risk. Cronos Group is currently generating about -0.18 per unit of risk. If you would invest  232.00  in Alpha Tau Medical on September 23, 2024 and sell it today you would earn a total of  78.00  from holding Alpha Tau Medical or generate 33.62% return on investment over 90 days.

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

Alpha Tau Medical  vs.  Cronos Group

Alpha Tau Medical

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Tau Medical are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Alpha Tau unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Alpha Tau and Cronos

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

The idea behind Alpha Tau Medical and Cronos Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.