Correlation Between Canna Consumer and Café Serendipity

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

By analyzing existing cross correlation between Canna Consumer Goods and Caf Serendipity Holdings, you can compare the effects of market volatilities on Canna Consumer and Café Serendipity 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 Canna Consumer with a short position of Café Serendipity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canna Consumer and Café Serendipity.

Diversification Opportunities for Canna Consumer and Café Serendipity

0.78

Correlation Coefficient

Canna Consumer  Café Serendipity

Poor diversification

The 3 months correlation between Canna and Café is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Canna Consumer Goods and Caf Serendipity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caf Serendipity Holdings and Canna Consumer 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 Canna Consumer Goods are associated (or correlated) with Café Serendipity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caf Serendipity Holdings has no effect on the direction of Canna Consumer i.e., Canna Consumer and Café Serendipity go up and down completely randomly.

Pair Corralation between Canna Consumer and Café Serendipity

Given the investment horizon of 90 days Canna Consumer Goods is expected to under-perform the Café Serendipity. In addition to that, Canna Consumer is 1.89 times more volatile than Caf Serendipity Holdings. It trades about -0.08 of its total potential returns per unit of risk. Caf Serendipity Holdings is currently generating about -0.13 per unit of volatility. If you would invest  0.02  in Caf Serendipity Holdings on December 26, 2024 and sell it today you would lose (0.01) from holding Caf Serendipity Holdings or give up 50.0% of portfolio value over 90 days.

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

Canna Consumer Goods  vs.  Caf Serendipity Holdings

Canna Consumer Goods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canna Consumer Goods has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's primary indicators remain relatively steady which may send shares a bit higher in April 2025. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Caf Serendipity Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caf Serendipity Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Canna Consumer and Café Serendipity

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

The idea behind Canna Consumer Goods and Caf Serendipity 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.