Correlation Between Elixinol Global and StateHouse Holdings

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

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

Diversification Opportunities for Elixinol Global and StateHouse Holdings

-0.14

Correlation Coefficient

Elixinol Global  StateHouse Holdings

Good diversification

The 3 months correlation between Elixinol and StateHouse is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Elixinol Global and StateHouse Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StateHouse Holdings and Elixinol Global 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 Elixinol Global are associated (or correlated) with StateHouse Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StateHouse Holdings has no effect on the direction of Elixinol Global i.e., Elixinol Global and StateHouse Holdings go up and down completely randomly.

Pair Corralation between Elixinol Global and StateHouse Holdings

Assuming the 90 days horizon Elixinol Global is expected to generate 13.33 times more return on investment than StateHouse Holdings. However, Elixinol Global is 13.33 times more volatile than StateHouse Holdings. It trades about 0.17 of its potential returns per unit of risk. StateHouse Holdings is currently generating about 0.01 per unit of risk. If you would invest  0.22  in Elixinol Global on September 13, 2024 and sell it today you would earn a total of  0.28  from holding Elixinol Global or generate 127.27% return on investment over 90 days.

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

Elixinol Global  vs.  StateHouse Holdings

Elixinol Global

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elixinol Global are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Elixinol Global reported solid returns over the last few months and may actually be approaching a breakup point.

StateHouse Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StateHouse Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, StateHouse Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Elixinol Global and StateHouse Holdings

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

The idea behind Elixinol Global and StateHouse Holdings 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 Transaction History module to view history of all your transactions and understand their impact on performance.