Correlation Between Chalice Brands and C21 Investments

Can any of the company-specific risk be diversified away by investing in both Chalice Brands and C21 Investments 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 Chalice Brands and C21 Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chalice Brands and C21 Investments, you can compare the effects of market volatilities on Chalice Brands and C21 Investments 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 Chalice Brands with a short position of C21 Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chalice Brands and C21 Investments.

Diversification Opportunities for Chalice Brands and C21 Investments

0.42

Correlation Coefficient

Chalice Brands  C21 Investments

Very weak diversification

The 3 months correlation between Chalice and C21 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chalice Brands and C21 Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C21 Investments and Chalice Brands 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 Chalice Brands are associated (or correlated) with C21 Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C21 Investments has no effect on the direction of Chalice Brands i.e., Chalice Brands and C21 Investments go up and down completely randomly.

Pair Corralation between Chalice Brands and C21 Investments

Assuming the 90 days horizon Chalice Brands is expected to generate 7.93 times more return on investment than C21 Investments. However, Chalice Brands is 7.93 times more volatile than C21 Investments. It trades about 0.04 of its potential returns per unit of risk. C21 Investments is currently generating about 0.02 per unit of risk. If you would invest  1.00  in Chalice Brands on October 8, 2024 and sell it today you would lose (1.00) from holding Chalice Brands or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.65%
Values	Daily Returns

Chalice Brands  vs.  C21 Investments

Chalice Brands

Risk-Adjusted Performance

0 of 100

Very Weak

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

C21 Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C21 Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, C21 Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chalice Brands and C21 Investments

The main advantage of trading using opposite Chalice Brands and C21 Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chalice Brands position performs unexpectedly, C21 Investments 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 C21 Investments will offset losses from the drop in C21 Investments' long position.

The idea behind Chalice Brands and C21 Investments 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.