Correlation Between Bayer AG and CannTrust Holdings

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

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

Diversification Opportunities for Bayer AG and CannTrust Holdings

0.0

Correlation Coefficient

Bayer AG  CannTrust Holdings

Pay attention - limited upside

The 3 months correlation between Bayer and CannTrust is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bayer AG PK and CannTrust Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CannTrust Holdings and Bayer AG 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 Bayer AG PK are associated (or correlated) with CannTrust Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CannTrust Holdings has no effect on the direction of Bayer AG i.e., Bayer AG and CannTrust Holdings go up and down completely randomly.

Pair Corralation between Bayer AG and CannTrust Holdings

If you would invest (100.00) in CannTrust Holdings on December 2, 2024 and sell it today you would earn a total of  100.00  from holding CannTrust Holdings or generate -100.0% return on investment over 90 days.

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

Bayer AG PK  vs.  CannTrust Holdings

Bayer AG PK

Risk-Adjusted Performance

Very Weak

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

CannTrust Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Bayer AG and CannTrust Holdings

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

The idea behind Bayer AG PK and CannTrust 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.