Correlation Between Decibel Cannabis and GelStat Corp

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

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

Diversification Opportunities for Decibel Cannabis and GelStat Corp

-0.02

Correlation Coefficient

Decibel Cannabis  GelStat Corp

Good diversification

The 3 months correlation between Decibel and GelStat is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Decibel Cannabis and GelStat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GelStat Corp 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 GelStat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GelStat Corp has no effect on the direction of Decibel Cannabis i.e., Decibel Cannabis and GelStat Corp go up and down completely randomly.

Pair Corralation between Decibel Cannabis and GelStat Corp

Assuming the 90 days horizon Decibel Cannabis is expected to generate 23.27 times less return on investment than GelStat Corp. But when comparing it to its historical volatility, Decibel Cannabis is 2.65 times less risky than GelStat Corp. It trades about 0.01 of its potential returns per unit of risk. GelStat Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.10  in GelStat Corp on October 11, 2024 and sell it today you would lose (0.07) from holding GelStat Corp or give up 70.0% 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.  GelStat Corp

Decibel Cannabis

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Decibel Cannabis are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Decibel Cannabis reported solid returns over the last few months and may actually be approaching a breakup point.

GelStat Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GelStat Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, GelStat Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Decibel Cannabis and GelStat Corp

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

The idea behind Decibel Cannabis and GelStat Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.