Correlation Between CLS Holdings and C21 Investments

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

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

Diversification Opportunities for CLS Holdings and C21 Investments

-0.09

Correlation Coefficient

CLS Holdings  C21 Investments

Good diversification

The 3 months correlation between CLS and C21 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding CLS Holdings USA and C21 Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C21 Investments and CLS Holdings 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 CLS Holdings USA 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 CLS Holdings i.e., CLS Holdings and C21 Investments go up and down completely randomly.

Pair Corralation between CLS Holdings and C21 Investments

Given the investment horizon of 90 days CLS Holdings USA is expected to generate 2.0 times more return on investment than C21 Investments. However, CLS Holdings is 2.0 times more volatile than C21 Investments. It trades about 0.02 of its potential returns per unit of risk. C21 Investments is currently generating about 0.0 per unit of risk. If you would invest  4.30  in CLS Holdings USA on December 26, 2024 and sell it today you would lose (1.30) from holding CLS Holdings USA or give up 30.23% of portfolio value over 90 days.

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

CLS Holdings USA  vs.  C21 Investments

CLS Holdings USA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CLS Holdings USA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, CLS Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

C21 Investments

Risk-Adjusted Performance

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 CLS Holdings and C21 Investments

The main advantage of trading using opposite CLS Holdings and C21 Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CLS Holdings 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 CLS Holdings USA 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.