Correlation Between Cann American and GSRX Industries

Can any of the company-specific risk be diversified away by investing in both Cann American and GSRX Industries 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 GSRX Industries 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 GSRX Industries, you can compare the effects of market volatilities on Cann American and GSRX Industries 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 GSRX Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cann American and GSRX Industries.

Diversification Opportunities for Cann American and GSRX Industries

0.0

Correlation Coefficient

Cann American  GSRX Industries

Pay attention - limited upside

The 3 months correlation between Cann and GSRX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cann American Corp and GSRX Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSRX Industries 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 GSRX Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSRX Industries has no effect on the direction of Cann American i.e., Cann American and GSRX Industries go up and down completely randomly.

Pair Corralation between Cann American and GSRX Industries

Given the investment horizon of 90 days Cann American Corp is expected to generate 2.91 times more return on investment than GSRX Industries. However, Cann American is 2.91 times more volatile than GSRX Industries. It trades about 0.07 of its potential returns per unit of risk. GSRX Industries is currently generating about -0.01 per unit of risk. If you would invest  0.93  in Cann American Corp on September 8, 2024 and sell it today you would lose (0.78) from holding Cann American Corp or give up 83.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Cann American Corp  vs.  GSRX Industries

Cann American Corp

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Cann American Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

GSRX Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GSRX Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, GSRX Industries is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cann American and GSRX Industries

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

The idea behind Cann American Corp and GSRX Industries 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.