Correlation Between Crown Electrokinetics and Gevo

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

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

Diversification Opportunities for Crown Electrokinetics and Gevo

0.29

Correlation Coefficient

Crown Electrokinetics  Gevo

Modest diversification

The 3 months correlation between Crown and Gevo is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Crown Electrokinetics Corp and Gevo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gevo Inc and Crown Electrokinetics 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 Crown Electrokinetics Corp are associated (or correlated) with Gevo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gevo Inc has no effect on the direction of Crown Electrokinetics i.e., Crown Electrokinetics and Gevo go up and down completely randomly.

Pair Corralation between Crown Electrokinetics and Gevo

Given the investment horizon of 90 days Crown Electrokinetics Corp is expected to under-perform the Gevo. But the stock apears to be less risky and, when comparing its historical volatility, Crown Electrokinetics Corp is 1.09 times less risky than Gevo. The stock trades about -0.35 of its potential returns per unit of risk. The Gevo Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  161.00  in Gevo Inc on September 17, 2024 and sell it today you would lose (7.00) from holding Gevo Inc or give up 4.35% of portfolio value over 90 days.

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

Crown Electrokinetics Corp  vs.  Gevo Inc

Crown Electrokinetics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Electrokinetics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Gevo Inc

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gevo Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Gevo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crown Electrokinetics and Gevo

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

The idea behind Crown Electrokinetics Corp and Gevo Inc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.