Correlation Between C21 Investments and BC Craft

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Can any of the company-specific risk be diversified away by investing in both C21 Investments and BC Craft 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 C21 Investments and BC Craft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between C21 Investments and BC Craft Supply, you can compare the effects of market volatilities on C21 Investments and BC Craft 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 C21 Investments with a short position of BC Craft. Check out your portfolio center. Please also check ongoing floating volatility patterns of C21 Investments and BC Craft.

Diversification Opportunities for C21 Investments and BC Craft

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between C21 and CRFTF is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding C21 Investments and BC Craft Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC Craft Supply and C21 Investments 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 C21 Investments are associated (or correlated) with BC Craft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC Craft Supply has no effect on the direction of C21 Investments i.e., C21 Investments and BC Craft go up and down completely randomly.

Pair Corralation between C21 Investments and BC Craft

Assuming the 90 days horizon C21 Investments is expected to generate 17.31 times less return on investment than BC Craft. But when comparing it to its historical volatility, C21 Investments is 6.17 times less risky than BC Craft. It trades about 0.02 of its potential returns per unit of risk. BC Craft Supply is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  53.00  in BC Craft Supply on October 24, 2024 and sell it today you would lose (52.99) from holding BC Craft Supply or give up 99.98% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.4%
ValuesDaily Returns

C21 Investments  vs.  BC Craft Supply

 Performance 
       Timeline  
C21 Investments 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days C21 Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
BC Craft Supply 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BC Craft Supply 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 nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

C21 Investments and BC Craft Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with C21 Investments and BC Craft

The main advantage of trading using opposite C21 Investments and BC Craft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C21 Investments position performs unexpectedly, BC Craft 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 BC Craft will offset losses from the drop in BC Craft's long position.
The idea behind C21 Investments and BC Craft Supply 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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