Correlation Between C21 Investments and Pure Harvest

Can any of the company-specific risk be diversified away by investing in both C21 Investments and Pure Harvest 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 Pure Harvest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between C21 Investments and Pure Harvest Cannabis, you can compare the effects of market volatilities on C21 Investments and Pure Harvest 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 Pure Harvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of C21 Investments and Pure Harvest.

Diversification Opportunities for C21 Investments and Pure Harvest

-0.45

Correlation Coefficient

C21 Investments  Pure Harvest

Very good diversification

The 3 months correlation between C21 and Pure is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding C21 Investments and Pure Harvest Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Harvest Cannabis 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 Pure Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Harvest Cannabis has no effect on the direction of C21 Investments i.e., C21 Investments and Pure Harvest go up and down completely randomly.

Pair Corralation between C21 Investments and Pure Harvest

Assuming the 90 days horizon C21 Investments is expected to generate 17.24 times less return on investment than Pure Harvest. But when comparing it to its historical volatility, C21 Investments is 4.24 times less risky than Pure Harvest. It trades about 0.02 of its potential returns per unit of risk. Pure Harvest Cannabis is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1.80  in Pure Harvest Cannabis on October 24, 2024 and sell it today you would lose (1.56) from holding Pure Harvest Cannabis or give up 86.67% of portfolio value over 90 days.

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

C21 Investments  vs.  Pure Harvest Cannabis

C21 Investments

Risk-Adjusted Performance

0 of 100

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.

Pure Harvest Cannabis

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Harvest Cannabis are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Pure Harvest reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with C21 Investments and Pure Harvest

The main advantage of trading using opposite C21 Investments and Pure Harvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C21 Investments position performs unexpectedly, Pure Harvest 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 Pure Harvest will offset losses from the drop in Pure Harvest's long position.

The idea behind C21 Investments and Pure Harvest 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.