Correlation Between Dyadic International and Cronos

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

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

Diversification Opportunities for Dyadic International and Cronos

-0.69

Correlation Coefficient

Dyadic International  Cronos

Excellent diversification

The 3 months correlation between Dyadic and Cronos is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dyadic International and Cronos Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos Group and Dyadic International 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 Dyadic International 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 Dyadic International i.e., Dyadic International and Cronos go up and down completely randomly.

Pair Corralation between Dyadic International and Cronos

Given the investment horizon of 90 days Dyadic International is expected to generate 2.36 times more return on investment than Cronos. However, Dyadic International is 2.36 times more volatile than Cronos Group. It trades about 0.08 of its potential returns per unit of risk. Cronos Group is currently generating about -0.03 per unit of risk. If you would invest  131.00  in Dyadic International on October 3, 2024 and sell it today you would earn a total of  44.00  from holding Dyadic International or generate 33.59% return on investment over 90 days.

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

Dyadic International  vs.  Cronos Group

Dyadic International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dyadic International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Dyadic International demonstrated 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 Dyadic International and Cronos

The main advantage of trading using opposite Dyadic International and Cronos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dyadic International 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 Dyadic International 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.