Correlation Between Critical Solutions and American Cannabis

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

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

Diversification Opportunities for Critical Solutions and American Cannabis

0.0

Correlation Coefficient

Critical Solutions  American Cannabis

Pay attention - limited upside

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

Pair Corralation between Critical Solutions and American Cannabis

If you would invest  0.10  in American Cannabis on December 30, 2024 and sell it today you would earn a total of  0.00  from holding American Cannabis or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Critical Solutions  vs.  American Cannabis

Critical Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Critical Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Critical Solutions is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

American Cannabis

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Cannabis are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent primary indicators, American Cannabis revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Critical Solutions and American Cannabis

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

The idea behind Critical Solutions and American Cannabis 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 CEOs Directory module to screen CEOs from public companies around the world.