Correlation Between Global Hemp and Maple Leaf

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

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

Diversification Opportunities for Global Hemp and Maple Leaf

0.35

Correlation Coefficient

Global Hemp  Maple Leaf

Weak diversification

The 3 months correlation between Global and Maple is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Global Hemp Group and Maple Leaf Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Green and Global Hemp 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 Hemp Group are associated (or correlated) with Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Green has no effect on the direction of Global Hemp i.e., Global Hemp and Maple Leaf go up and down completely randomly.

Pair Corralation between Global Hemp and Maple Leaf

Assuming the 90 days horizon Global Hemp Group is expected to generate 5.2 times more return on investment than Maple Leaf. However, Global Hemp is 5.2 times more volatile than Maple Leaf Green. It trades about 0.19 of its potential returns per unit of risk. Maple Leaf Green is currently generating about 0.06 per unit of risk. If you would invest  1.00  in Global Hemp Group on December 29, 2024 and sell it today you would earn a total of  0.20  from holding Global Hemp Group or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Global Hemp Group  vs.  Maple Leaf Green

Global Hemp Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Hemp Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Global Hemp reported solid returns over the last few months and may actually be approaching a breakup point.

Maple Leaf Green

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maple Leaf Green are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Maple Leaf reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Hemp and Maple Leaf

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

The idea behind Global Hemp Group and Maple Leaf Green 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..