Correlation Between Kronos Advanced and TOMI Environmental

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

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

Diversification Opportunities for Kronos Advanced and TOMI Environmental

-0.47

Correlation Coefficient

Kronos Advanced  TOMI Environmental

Very good diversification

The 3 months correlation between Kronos and TOMI is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Advanced Technologies and TOMI Environmental Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOMI Environmental and Kronos Advanced 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 Kronos Advanced Technologies are associated (or correlated) with TOMI Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOMI Environmental has no effect on the direction of Kronos Advanced i.e., Kronos Advanced and TOMI Environmental go up and down completely randomly.

Pair Corralation between Kronos Advanced and TOMI Environmental

Given the investment horizon of 90 days Kronos Advanced Technologies is expected to generate 2.99 times more return on investment than TOMI Environmental. However, Kronos Advanced is 2.99 times more volatile than TOMI Environmental Solutions. It trades about 0.12 of its potential returns per unit of risk. TOMI Environmental Solutions is currently generating about -0.02 per unit of risk. If you would invest  0.55  in Kronos Advanced Technologies on August 31, 2024 and sell it today you would earn a total of  0.38  from holding Kronos Advanced Technologies or generate 69.09% return on investment over 90 days.

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

Kronos Advanced Technologies  vs.  TOMI Environmental Solutions

Kronos Advanced Tech

Risk-Adjusted Performance

9 of 100

OK

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

TOMI Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOMI Environmental Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, TOMI Environmental is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kronos Advanced and TOMI Environmental

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

The idea behind Kronos Advanced Technologies and TOMI Environmental Solutions 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.