Correlation Between Decibel Cannabis and China SXT

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

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

Diversification Opportunities for Decibel Cannabis and China SXT

-0.05

Correlation Coefficient

Decibel Cannabis  China SXT

Good diversification

The 3 months correlation between Decibel and China is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Decibel Cannabis 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 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 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 Decibel Cannabis i.e., Decibel Cannabis and China SXT go up and down completely randomly.

Pair Corralation between Decibel Cannabis and China SXT

Assuming the 90 days horizon Decibel Cannabis is expected to generate 7.61 times less return on investment than China SXT. But when comparing it to its historical volatility, Decibel Cannabis is 3.02 times less risky than China SXT. It trades about 0.03 of its potential returns per unit of risk. China SXT Pharmaceuticals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  256.00  in China SXT Pharmaceuticals on December 20, 2024 and sell it today you would earn a total of  11.00  from holding China SXT Pharmaceuticals or generate 4.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Decibel Cannabis  vs.  China SXT Pharmaceuticals

Decibel Cannabis

Risk-Adjusted Performance

Insignificant

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 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

China SXT Pharmaceuticals

Risk-Adjusted Performance

Modest

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 Decibel Cannabis and China SXT

The main advantage of trading using opposite Decibel Cannabis and China SXT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Decibel Cannabis 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 Decibel Cannabis 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.