Correlation Between Vericel Corp and Crayon Group

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

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

Diversification Opportunities for Vericel Corp and Crayon Group

-0.55

Correlation Coefficient

Vericel Corp  Crayon Group

Excellent diversification

The 3 months correlation between Vericel and Crayon is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Vericel Corp Ord and Crayon Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crayon Group Holding and Vericel Corp 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 Vericel Corp Ord are associated (or correlated) with Crayon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crayon Group Holding has no effect on the direction of Vericel Corp i.e., Vericel Corp and Crayon Group go up and down completely randomly.

Pair Corralation between Vericel Corp and Crayon Group

Given the investment horizon of 90 days Vericel Corp Ord is expected to generate 1.09 times more return on investment than Crayon Group. However, Vericel Corp is 1.09 times more volatile than Crayon Group Holding. It trades about 0.24 of its potential returns per unit of risk. Crayon Group Holding is currently generating about -0.01 per unit of risk. If you would invest  4,209  in Vericel Corp Ord on October 14, 2024 and sell it today you would earn a total of  1,741  from holding Vericel Corp Ord or generate 41.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Vericel Corp Ord  vs.  Crayon Group Holding

Vericel Corp Ord

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vericel Corp Ord are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Vericel Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Crayon Group Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crayon Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Crayon Group is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vericel Corp and Crayon Group

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

The idea behind Vericel Corp Ord and Crayon Group Holding 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.