Correlation Between C21 Investments and China SXT

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

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

Diversification Opportunities for C21 Investments and China SXT

-0.2

Correlation Coefficient

C21 Investments  China SXT

Good diversification

The 3 months correlation between C21 and China is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding C21 Investments and China SXT Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China SXT Pharmaceuticals 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 China SXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China SXT Pharmaceuticals has no effect on the direction of C21 Investments i.e., C21 Investments and China SXT go up and down completely randomly.

Pair Corralation between C21 Investments and China SXT

Assuming the 90 days horizon C21 Investments is expected to under-perform the China SXT. But the otc stock apears to be less risky and, when comparing its historical volatility, C21 Investments is 3.22 times less risky than China SXT. The otc stock trades about -0.03 of its potential returns per unit of risk. The China SXT Pharmaceuticals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  268.00  in China SXT Pharmaceuticals on December 18, 2024 and sell it today you would lose (6.00) from holding China SXT Pharmaceuticals or give up 2.24% of portfolio value over 90 days.

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

C21 Investments  vs.  China SXT Pharmaceuticals

C21 Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days C21 Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

China SXT Pharmaceuticals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China SXT Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, China SXT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with C21 Investments and China SXT

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

The idea behind C21 Investments and China SXT Pharmaceuticals 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.