Correlation Between Decibel Cannabis and Body

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

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

Diversification Opportunities for Decibel Cannabis and Body

-0.2

Correlation Coefficient

Decibel Cannabis  Body

Good diversification

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

Pair Corralation between Decibel Cannabis and Body

Assuming the 90 days horizon Decibel Cannabis is expected to generate 1.79 times less return on investment than Body. But when comparing it to its historical volatility, Decibel Cannabis is 1.84 times less risky than Body. It trades about 0.02 of its potential returns per unit of risk. Body and Mind is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7.49  in Body and Mind on September 4, 2024 and sell it today you would lose (6.48) from holding Body and Mind or give up 86.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Decibel Cannabis  vs.  Body and Mind

Decibel Cannabis

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Decibel Cannabis are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Decibel Cannabis reported solid returns over the last few months and may actually be approaching a breakup point.

Body and Mind

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Body and Mind has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's primary indicators remain relatively steady which may send shares a bit higher in January 2025. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Pair Trading with Decibel Cannabis and Body

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

The idea behind Decibel Cannabis and Body and Mind 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.