Correlation Between Global Cannabis and AuthID

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

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

Diversification Opportunities for Global Cannabis and AuthID

0.26

Correlation Coefficient

Global Cannabis  AuthID

Modest diversification

The 3 months correlation between Global and AuthID is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Global Cannabis Applications and authID Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on authID Inc and Global 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 Global Cannabis Applications are associated (or correlated) with AuthID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of authID Inc has no effect on the direction of Global Cannabis i.e., Global Cannabis and AuthID go up and down completely randomly.

Pair Corralation between Global Cannabis and AuthID

Assuming the 90 days horizon Global Cannabis Applications is expected to generate 2.36 times more return on investment than AuthID. However, Global Cannabis is 2.36 times more volatile than authID Inc. It trades about 0.11 of its potential returns per unit of risk. authID Inc is currently generating about -0.01 per unit of risk. If you would invest  0.31  in Global Cannabis Applications on November 27, 2024 and sell it today you would earn a total of  0.08  from holding Global Cannabis Applications or generate 25.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Global Cannabis Applications  vs.  authID Inc

Global Cannabis Appl

Risk-Adjusted Performance

OK

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

authID Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days authID Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, AuthID is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global Cannabis and AuthID

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

The idea behind Global Cannabis Applications and authID Inc 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.