Correlation Between Cann American and Nippon Shinyaku

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

Diversification Opportunities for Cann American and Nippon Shinyaku

0.43

Correlation Coefficient

Cann American  Nippon Shinyaku

Very weak diversification

The 3 months correlation between Cann and Nippon is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cann American Corp and Nippon Shinyaku Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Shinyaku 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 Nippon Shinyaku. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Shinyaku has no effect on the direction of Cann American i.e., Cann American and Nippon Shinyaku go up and down completely randomly.

Pair Corralation between Cann American and Nippon Shinyaku

Given the investment horizon of 90 days Cann American Corp is expected to generate 8.95 times more return on investment than Nippon Shinyaku. However, Cann American is 8.95 times more volatile than Nippon Shinyaku Co. It trades about 0.1 of its potential returns per unit of risk. Nippon Shinyaku Co is currently generating about 0.01 per unit of risk. If you would invest  0.29  in Cann American Corp on December 25, 2024 and sell it today you would earn a total of  0.11  from holding Cann American Corp or generate 37.93% return on investment over 90 days.

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

Cann American Corp  vs.  Nippon Shinyaku Co

Cann American Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cann American Corp are ranked lower than 7 (%) 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.

Nippon Shinyaku

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cann American and Nippon Shinyaku

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

The idea behind Cann American Corp and Nippon Shinyaku Co 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.