Correlation Between Cann American and Nexien Biopharma

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

Diversification Opportunities for Cann American and Nexien Biopharma

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Cann and Nexien is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cann American Corp and Nexien Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexien Biopharma 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 Nexien Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexien Biopharma has no effect on the direction of Cann American i.e., Cann American and Nexien Biopharma go up and down completely randomly.

Pair Corralation between Cann American and Nexien Biopharma

Given the investment horizon of 90 days Cann American Corp is expected to under-perform the Nexien Biopharma. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cann American Corp is 2.52 times less risky than Nexien Biopharma. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Nexien Biopharma is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1.70  in Nexien Biopharma on September 7, 2024 and sell it today you would earn a total of  0.30  from holding Nexien Biopharma or generate 17.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy96.92%
ValuesDaily Returns

Cann American Corp  vs.  Nexien Biopharma

 Performance 
       Timeline  
Cann American Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Nexien Biopharma 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Nexien Biopharma are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Nexien Biopharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Cann American and Nexien Biopharma Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cann American and Nexien Biopharma

The main advantage of trading using opposite Cann American and Nexien Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cann American position performs unexpectedly, Nexien Biopharma 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 Nexien Biopharma will offset losses from the drop in Nexien Biopharma's long position.
The idea behind Cann American Corp and Nexien Biopharma 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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