Correlation Between Cann American and Premier Biomedical

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

By analyzing existing cross correlation between Cann American Corp and Premier Biomedical, you can compare the effects of market volatilities on Cann American and Premier Biomedical 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 Cann American with a short position of Premier Biomedical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cann American and Premier Biomedical.

Diversification Opportunities for Cann American and Premier Biomedical

-0.3

Correlation Coefficient

Cann American  Premier Biomedical

Very good diversification

The 3 months correlation between Cann and Premier is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cann American Corp and Premier Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Biomedical and Cann American 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 Cann American Corp are associated (or correlated) with Premier Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Biomedical has no effect on the direction of Cann American i.e., Cann American and Premier Biomedical go up and down completely randomly.

Pair Corralation between Cann American and Premier Biomedical

Given the investment horizon of 90 days Cann American Corp is expected to generate 1.4 times more return on investment than Premier Biomedical. However, Cann American is 1.4 times more volatile than Premier Biomedical. It trades about 0.06 of its potential returns per unit of risk. Premier Biomedical is currently generating about 0.02 per unit of risk. If you would invest  0.39  in Cann American Corp on December 28, 2024 and sell it today you would lose (0.01) from holding Cann American Corp or give up 2.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Cann American Corp  vs.  Premier Biomedical

Cann American Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cann American Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Cann American sustained solid returns over the last few months and may actually be approaching a breakup point.

Premier Biomedical

Risk-Adjusted Performance

Weak

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

Pair Trading with Cann American and Premier Biomedical

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

The idea behind Cann American Corp and Premier Biomedical 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.