Correlation Between Greater Cannabis and Plandai Biotech

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

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

Diversification Opportunities for Greater Cannabis and Plandai Biotech

-0.28

Correlation Coefficient

Greater Cannabis  Plandai Biotech

Very good diversification

The 3 months correlation between Greater and Plandai is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Greater Cannabis and Plandai Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plandai Biotech 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 Plandai Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plandai Biotech has no effect on the direction of Greater Cannabis i.e., Greater Cannabis and Plandai Biotech go up and down completely randomly.

Pair Corralation between Greater Cannabis and Plandai Biotech

Given the investment horizon of 90 days Greater Cannabis is expected to generate 36.64 times less return on investment than Plandai Biotech. But when comparing it to its historical volatility, Greater Cannabis is 15.89 times less risky than Plandai Biotech. It trades about 0.11 of its potential returns per unit of risk. Plandai Biotech is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Plandai Biotech on December 23, 2024 and sell it today you would earn a total of  0.00  from holding Plandai Biotech or generate 0.0% return on investment over 90 days.

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

Greater Cannabis  vs.  Plandai Biotech

Greater Cannabis

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greater Cannabis are ranked lower than 8 (%) 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.

Plandai Biotech

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Plandai Biotech are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Plandai Biotech disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Greater Cannabis and Plandai Biotech

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

The idea behind Greater Cannabis and Plandai Biotech 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.