Correlation Between Green Cures and Medicine Man

Can any of the company-specific risk be diversified away by investing in both Green Cures and Medicine Man 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 Medicine Man 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 Medicine Man Technologies, you can compare the effects of market volatilities on Green Cures and Medicine Man 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 Medicine Man. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Cures and Medicine Man.

Diversification Opportunities for Green Cures and Medicine Man

-0.08

Correlation Coefficient

Green Cures  Medicine Man

Good diversification

The 3 months correlation between Green and Medicine is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Green Cures Botanical and Medicine Man Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicine Man Technologies 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 Medicine Man. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicine Man Technologies has no effect on the direction of Green Cures i.e., Green Cures and Medicine Man go up and down completely randomly.

Pair Corralation between Green Cures and Medicine Man

Given the investment horizon of 90 days Green Cures Botanical is expected to generate 1.15 times more return on investment than Medicine Man. However, Green Cures is 1.15 times more volatile than Medicine Man Technologies. It trades about 0.2 of its potential returns per unit of risk. Medicine Man Technologies is currently generating about 0.17 per unit of risk. If you would invest  0.02  in Green Cures Botanical on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Green Cures Botanical or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Green Cures Botanical  vs.  Medicine Man Technologies

Green Cures Botanical

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Green Cures Botanical are ranked lower than 16 (%) 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.

Medicine Man Technologies

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Medicine Man Technologies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Medicine Man showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Green Cures and Medicine Man

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

The idea behind Green Cures Botanical and Medicine Man Technologies 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.