Correlation Between Green Cures and Nextleaf Solutions

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

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

Diversification Opportunities for Green Cures and Nextleaf Solutions

0.13

Correlation Coefficient

Green Cures  Nextleaf Solutions

Average diversification

The 3 months correlation between Green and Nextleaf is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Green Cures Botanical and Nextleaf Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextleaf Solutions and Green Cures 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 Green Cures Botanical are associated (or correlated) with Nextleaf Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextleaf Solutions has no effect on the direction of Green Cures i.e., Green Cures and Nextleaf Solutions go up and down completely randomly.

Pair Corralation between Green Cures and Nextleaf Solutions

Given the investment horizon of 90 days Green Cures Botanical is expected to generate 7.45 times more return on investment than Nextleaf Solutions. However, Green Cures is 7.45 times more volatile than Nextleaf Solutions. It trades about 0.14 of its potential returns per unit of risk. Nextleaf Solutions is currently generating about 0.01 per unit of risk. If you would invest  0.02  in Green Cures Botanical on October 6, 2024 and sell it today you would lose (0.01) from holding Green Cures Botanical or give up 50.0% of portfolio value over 90 days.

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

Green Cures Botanical  vs.  Nextleaf Solutions

Green Cures Botanical

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Green Cures Botanical are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Green Cures unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nextleaf Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextleaf Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Nextleaf Solutions is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Green Cures and Nextleaf Solutions

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

The idea behind Green Cures Botanical and Nextleaf 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.