Correlation Between Greater Cannabis and Golden Developing

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

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

Diversification Opportunities for Greater Cannabis and Golden Developing

0.57

Correlation Coefficient

Greater Cannabis  Golden Developing

Very weak diversification

The 3 months correlation between Greater and Golden is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Greater Cannabis and Golden Developing Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Developing and Greater 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 Greater Cannabis are associated (or correlated) with Golden Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Developing has no effect on the direction of Greater Cannabis i.e., Greater Cannabis and Golden Developing go up and down completely randomly.

Pair Corralation between Greater Cannabis and Golden Developing

Given the investment horizon of 90 days Greater Cannabis is expected to generate 2.35 times more return on investment than Golden Developing. However, Greater Cannabis is 2.35 times more volatile than Golden Developing Solutions. It trades about 0.05 of its potential returns per unit of risk. Golden Developing Solutions is currently generating about -0.12 per unit of risk. If you would invest  0.06  in Greater Cannabis on September 3, 2024 and sell it today you would lose (0.01) from holding Greater Cannabis or give up 16.67% of portfolio value over 90 days.

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

Greater Cannabis  vs.  Golden Developing Solutions

Greater Cannabis

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Greater Cannabis are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Greater Cannabis displayed solid returns over the last few months and may actually be approaching a breakup point.

Golden Developing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Developing Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Greater Cannabis and Golden Developing

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

The idea behind Greater Cannabis and Golden Developing Solutions 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.