Correlation Between TECSYS and Cronos

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

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

Diversification Opportunities for TECSYS and Cronos

-0.63

Correlation Coefficient

TECSYS  Cronos

Excellent diversification

The 3 months correlation between TECSYS and Cronos is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding TECSYS Inc and Cronos Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos Group and TECSYS 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 TECSYS Inc 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 TECSYS i.e., TECSYS and Cronos go up and down completely randomly.

Pair Corralation between TECSYS and Cronos

Assuming the 90 days trading horizon TECSYS Inc is expected to generate 0.76 times more return on investment than Cronos. However, TECSYS Inc is 1.32 times less risky than Cronos. It trades about 0.05 of its potential returns per unit of risk. Cronos Group is currently generating about 0.0 per unit of risk. If you would invest  2,752  in TECSYS Inc on October 13, 2024 and sell it today you would earn a total of  1,628  from holding TECSYS Inc or generate 59.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

TECSYS Inc  vs.  Cronos Group

TECSYS Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TECSYS Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, TECSYS is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the 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 TECSYS and Cronos

The main advantage of trading using opposite TECSYS and Cronos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECSYS 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 TECSYS Inc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.