Correlation Between Greater Cannabis and Pharma Bio

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

By analyzing existing cross correlation between Greater Cannabis and Pharma Bio Serv, you can compare the effects of market volatilities on Greater Cannabis and Pharma Bio 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 Pharma Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greater Cannabis and Pharma Bio.

Diversification Opportunities for Greater Cannabis and Pharma Bio

0.43

Correlation Coefficient

Greater Cannabis  Pharma Bio

Very weak diversification

The 3 months correlation between Greater and Pharma is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Greater Cannabis and Pharma Bio Serv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharma Bio Serv 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 Pharma Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharma Bio Serv has no effect on the direction of Greater Cannabis i.e., Greater Cannabis and Pharma Bio go up and down completely randomly.

Pair Corralation between Greater Cannabis and Pharma Bio

Given the investment horizon of 90 days Greater Cannabis is expected to generate 2.33 times more return on investment than Pharma Bio. However, Greater Cannabis is 2.33 times more volatile than Pharma Bio Serv. It trades about 0.07 of its potential returns per unit of risk. Pharma Bio Serv is currently generating about -0.03 per unit of risk. If you would invest  0.05  in Greater Cannabis on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Greater Cannabis or generate 0.0% return on investment over 90 days.

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

Greater Cannabis  vs.  Pharma Bio Serv

Greater Cannabis

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Greater Cannabis are ranked lower than 5 (%) 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.

Pharma Bio Serv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pharma Bio Serv has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Greater Cannabis and Pharma Bio

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

The idea behind Greater Cannabis and Pharma Bio Serv 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.