Correlation Between Cronos and Basanite

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

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

Diversification Opportunities for Cronos and Basanite

-0.17

Correlation Coefficient

Cronos  Basanite

Good diversification

The 3 months correlation between Cronos and Basanite is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cronos Group and Basanite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basanite and Cronos 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 Cronos Group are associated (or correlated) with Basanite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basanite has no effect on the direction of Cronos i.e., Cronos and Basanite go up and down completely randomly.

Pair Corralation between Cronos and Basanite

Given the investment horizon of 90 days Cronos Group is expected to generate 0.38 times more return on investment than Basanite. However, Cronos Group is 2.65 times less risky than Basanite. It trades about 0.13 of its potential returns per unit of risk. Basanite is currently generating about 0.04 per unit of risk. If you would invest  214.00  in Cronos Group on May 16, 2025 and sell it today you would earn a total of  48.00  from holding Cronos Group or generate 22.43% return on investment over 90 days.

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

Cronos Group  vs.  Basanite

Cronos Group

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Cronos Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Cronos displayed solid returns over the last few months and may actually be approaching a breakup point.

Basanite

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Basanite are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Basanite sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cronos and Basanite

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

The idea behind Cronos Group and Basanite 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.