Correlation Between CRO and MATIC

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

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

Diversification Opportunities for CRO and MATIC

0.4

Correlation Coefficient

CRO  MATIC

Very weak diversification

The 3 months correlation between CRO and MATIC is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CRO and MATIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MATIC and CRO 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 CRO are associated (or correlated) with MATIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MATIC has no effect on the direction of CRO i.e., CRO and MATIC go up and down completely randomly.

Pair Corralation between CRO and MATIC

Assuming the 90 days trading horizon CRO is expected to generate 1.12 times more return on investment than MATIC. However, CRO is 1.12 times more volatile than MATIC. It trades about 0.15 of its potential returns per unit of risk. MATIC is currently generating about 0.0 per unit of risk. If you would invest  10.00  in CRO on May 10, 2025 and sell it today you would earn a total of  5.00  from holding CRO or generate 50.0% return on investment over 90 days.

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

CRO  vs.  MATIC

CRO

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CRO are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, CRO exhibited solid returns over the last few months and may actually be approaching a breakup point.

MATIC

Risk-Adjusted Performance

Weakest

Over the last 90 days MATIC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, MATIC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CRO and MATIC

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

The idea behind CRO and MATIC 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.