Correlation Between ANI Pharmaceuticals and Charlottes Web

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

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

Diversification Opportunities for ANI Pharmaceuticals and Charlottes Web

0.24

Correlation Coefficient

ANI Pharmaceuticals  Charlottes Web

Modest diversification

The 3 months correlation between ANI and Charlottes is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ANI Pharmaceuticals and Charlottes Web Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charlottes Web Holdings and ANI Pharmaceuticals 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 ANI Pharmaceuticals are associated (or correlated) with Charlottes Web. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charlottes Web Holdings has no effect on the direction of ANI Pharmaceuticals i.e., ANI Pharmaceuticals and Charlottes Web go up and down completely randomly.

Pair Corralation between ANI Pharmaceuticals and Charlottes Web

Given the investment horizon of 90 days ANI Pharmaceuticals is expected to generate 0.54 times more return on investment than Charlottes Web. However, ANI Pharmaceuticals is 1.87 times less risky than Charlottes Web. It trades about -0.03 of its potential returns per unit of risk. Charlottes Web Holdings is currently generating about -0.06 per unit of risk. If you would invest  6,303  in ANI Pharmaceuticals on August 31, 2024 and sell it today you would lose (364.00) from holding ANI Pharmaceuticals or give up 5.78% of portfolio value over 90 days.

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

ANI Pharmaceuticals  vs.  Charlottes Web Holdings

ANI Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANI Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, ANI Pharmaceuticals is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Charlottes Web Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charlottes Web Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ANI Pharmaceuticals and Charlottes Web

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

The idea behind ANI Pharmaceuticals and Charlottes Web Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.