Correlation Between Cann American and Slang Worldwide

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

Diversification Opportunities for Cann American and Slang Worldwide

0.5

Correlation Coefficient

Cann American  Slang Worldwide

Very weak diversification

The 3 months correlation between Cann and Slang is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cann American Corp and Slang Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slang Worldwide 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 Slang Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slang Worldwide has no effect on the direction of Cann American i.e., Cann American and Slang Worldwide go up and down completely randomly.

Pair Corralation between Cann American and Slang Worldwide

Given the investment horizon of 90 days Cann American Corp is expected to under-perform the Slang Worldwide. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cann American Corp is 2.2 times less risky than Slang Worldwide. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Slang Worldwide is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.95  in Slang Worldwide on September 11, 2024 and sell it today you would lose (0.64) from holding Slang Worldwide or give up 67.37% of portfolio value over 90 days.

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

Cann American Corp  vs.  Slang Worldwide

Cann American Corp

Risk-Adjusted Performance

0 of 100

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 fragile 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.

Slang Worldwide

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Slang Worldwide are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Slang Worldwide reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cann American and Slang Worldwide

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

The idea behind Cann American Corp and Slang Worldwide 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.