Correlation Between Croda Intl and CRISPR Therapeutics

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Can any of the company-specific risk be diversified away by investing in both Croda Intl and CRISPR Therapeutics 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 Croda Intl and CRISPR Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Croda Intl Plc and CRISPR Therapeutics AG, you can compare the effects of market volatilities on Croda Intl and CRISPR Therapeutics 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 Croda Intl with a short position of CRISPR Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Croda Intl and CRISPR Therapeutics.

Diversification Opportunities for Croda Intl and CRISPR Therapeutics

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Croda and CRISPR is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Croda Intl Plc and CRISPR Therapeutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRISPR Therapeutics and Croda Intl 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 Croda Intl Plc are associated (or correlated) with CRISPR Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRISPR Therapeutics has no effect on the direction of Croda Intl i.e., Croda Intl and CRISPR Therapeutics go up and down completely randomly.

Pair Corralation between Croda Intl and CRISPR Therapeutics

Assuming the 90 days horizon Croda Intl Plc is expected to generate 0.78 times more return on investment than CRISPR Therapeutics. However, Croda Intl Plc is 1.27 times less risky than CRISPR Therapeutics. It trades about 0.12 of its potential returns per unit of risk. CRISPR Therapeutics AG is currently generating about 0.07 per unit of risk. If you would invest  7,829  in Croda Intl Plc on August 28, 2022 and sell it today you would earn a total of  636.00  from holding Croda Intl Plc or generate 8.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Croda Intl Plc  vs.  CRISPR Therapeutics AG

 Performance (%) 
       Timeline  
Croda Intl Plc 
Croda Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Croda Intl Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Croda Intl is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Croda Price Channel

CRISPR Therapeutics 
CRISPR Performance
0 of 100
Over the last 90 days CRISPR Therapeutics AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2022. The recent disarray may also be a sign of long period up-swing for the firm insiders.

CRISPR Price Channel

Croda Intl and CRISPR Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Croda Intl and CRISPR Therapeutics

The main advantage of trading using opposite Croda Intl and CRISPR Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Croda Intl position performs unexpectedly, CRISPR Therapeutics 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 CRISPR Therapeutics will offset losses from the drop in CRISPR Therapeutics' long position.
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The idea behind Croda Intl Plc and CRISPR Therapeutics AG 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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