Correlation Between BC Bud and CareRx

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

By analyzing existing cross correlation between The BC Bud and CareRx, you can compare the effects of market volatilities on BC Bud and CareRx 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 BC Bud with a short position of CareRx. Check out your portfolio center. Please also check ongoing floating volatility patterns of BC Bud and CareRx.

Diversification Opportunities for BC Bud and CareRx

-0.52

Correlation Coefficient

BC Bud  CareRx

Excellent diversification

The 3 months correlation between BCBCF and CareRx is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding The BC Bud and CareRx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareRx and BC Bud 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 The BC Bud are associated (or correlated) with CareRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareRx has no effect on the direction of BC Bud i.e., BC Bud and CareRx go up and down completely randomly.

Pair Corralation between BC Bud and CareRx

Assuming the 90 days horizon The BC Bud is expected to under-perform the CareRx. In addition to that, BC Bud is 3.82 times more volatile than CareRx. It trades about -0.09 of its total potential returns per unit of risk. CareRx is currently generating about 0.22 per unit of volatility. If you would invest  128.00  in CareRx on December 21, 2024 and sell it today you would earn a total of  55.00  from holding CareRx or generate 42.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

The BC Bud  vs.  CareRx

BC Bud

Risk-Adjusted Performance

Very Weak

Over the last 90 days The BC Bud has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CareRx

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CareRx are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, CareRx reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BC Bud and CareRx

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

The idea behind The BC Bud and CareRx 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 Commodity Directory module to find actively traded commodities issued by global exchanges.