Correlation Between OrganiGram Holdings and Cronos

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

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

Diversification Opportunities for OrganiGram Holdings and Cronos

0.69

Correlation Coefficient

OrganiGram Holdings  Cronos

Poor diversification

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

Pair Corralation between OrganiGram Holdings and Cronos

Assuming the 90 days trading horizon OrganiGram Holdings is expected to under-perform the Cronos. But the stock apears to be less risky and, when comparing its historical volatility, OrganiGram Holdings is 1.0 times less risky than Cronos. The stock trades about -0.05 of its potential returns per unit of risk. The Cronos Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  294.00  in Cronos Group on September 20, 2024 and sell it today you would lose (22.00) from holding Cronos Group or give up 7.48% of portfolio value over 90 days.

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

OrganiGram Holdings  vs.  Cronos Group

OrganiGram Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OrganiGram Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with OrganiGram Holdings and Cronos

The main advantage of trading using opposite OrganiGram Holdings and Cronos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OrganiGram Holdings 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 OrganiGram Holdings 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.