Correlation Between Amicus Therapeutics and Cronos

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

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

Diversification Opportunities for Amicus Therapeutics and Cronos

0.64

Correlation Coefficient

Amicus Therapeutics  Cronos

Poor diversification

The 3 months correlation between Amicus and Cronos is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Amicus Therapeutics and Cronos Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos Group and Amicus Therapeutics 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 Amicus Therapeutics 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 Amicus Therapeutics i.e., Amicus Therapeutics and Cronos go up and down completely randomly.

Pair Corralation between Amicus Therapeutics and Cronos

Given the investment horizon of 90 days Amicus Therapeutics is expected to under-perform the Cronos. In addition to that, Amicus Therapeutics is 1.29 times more volatile than Cronos Group. It trades about -0.1 of its total potential returns per unit of risk. Cronos Group is currently generating about 0.02 per unit of volatility. If you would invest  202.00  in Cronos Group on October 9, 2024 and sell it today you would earn a total of  1.00  from holding Cronos Group or generate 0.5% return on investment over 90 days.

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

Amicus Therapeutics  vs.  Cronos Group

Amicus Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amicus Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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.

Pair Trading with Amicus Therapeutics and Cronos

The main advantage of trading using opposite Amicus Therapeutics and Cronos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amicus Therapeutics 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 Amicus Therapeutics 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.