Correlation Between Canopy Growth and Yuexiu Transport

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

By analyzing existing cross correlation between Canopy Growth Corp and Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on Canopy Growth and Yuexiu Transport 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 Canopy Growth with a short position of Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canopy Growth and Yuexiu Transport.

Diversification Opportunities for Canopy Growth and Yuexiu Transport

-0.62

Correlation Coefficient

Canopy Growth  Yuexiu Transport

Excellent diversification

The 3 months correlation between Canopy and Yuexiu is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Canopy Growth Corp and Yuexiu Transport Infrastructur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuexiu Transport Inf and Canopy Growth 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 Canopy Growth Corp are associated (or correlated) with Yuexiu Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuexiu Transport Inf has no effect on the direction of Canopy Growth i.e., Canopy Growth and Yuexiu Transport go up and down completely randomly.

Pair Corralation between Canopy Growth and Yuexiu Transport

Considering the 90-day investment horizon Canopy Growth Corp is expected to under-perform the Yuexiu Transport. In addition to that, Canopy Growth is 1.45 times more volatile than Yuexiu Transport Infrastructure. It trades about -0.16 of its total potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about 0.16 per unit of volatility. If you would invest  45.00  in Yuexiu Transport Infrastructure on September 21, 2024 and sell it today you would earn a total of  13.00  from holding Yuexiu Transport Infrastructure or generate 28.89% return on investment over 90 days.

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

Canopy Growth Corp  vs.  Yuexiu Transport Infrastructur

Canopy Growth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canopy Growth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Yuexiu Transport Inf

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yuexiu Transport Infrastructure are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Yuexiu Transport reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canopy Growth and Yuexiu Transport

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

The idea behind Canopy Growth Corp and Yuexiu Transport Infrastructure 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..