Correlation Between Crane and MKDWELL Tech

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

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

Diversification Opportunities for Crane and MKDWELL Tech

-0.55

Correlation Coefficient

Crane  MKDWELL Tech

Excellent diversification

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

Pair Corralation between Crane and MKDWELL Tech

Allowing for the 90-day total investment horizon Crane is expected to generate 62.92 times less return on investment than MKDWELL Tech. But when comparing it to its historical volatility, Crane Company is 18.05 times less risky than MKDWELL Tech. It trades about 0.07 of its potential returns per unit of risk. MKDWELL Tech Warrants is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1.12  in MKDWELL Tech Warrants on September 14, 2024 and sell it today you would earn a total of  1.95  from holding MKDWELL Tech Warrants or generate 174.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	37.5%
Values	Daily Returns

Crane Company  vs.  MKDWELL Tech Warrants

Crane Company

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Crane may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MKDWELL Tech Warrants

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MKDWELL Tech Warrants are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, MKDWELL Tech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crane and MKDWELL Tech

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

The idea behind Crane Company and MKDWELL Tech Warrants 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.