Correlation Between Groove Botanicals and Canntab Therapeutics

Can any of the company-specific risk be diversified away by investing in both Groove Botanicals and Canntab Therapeutics 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 Groove Botanicals and Canntab Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Groove Botanicals and Canntab Therapeutics Limited, you can compare the effects of market volatilities on Groove Botanicals and Canntab Therapeutics 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 Groove Botanicals with a short position of Canntab Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groove Botanicals and Canntab Therapeutics.

Diversification Opportunities for Groove Botanicals and Canntab Therapeutics

0.0

Correlation Coefficient

Groove Botanicals  Canntab Therapeutics

Pay attention - limited upside

The 3 months correlation between Groove and Canntab is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Groove Botanicals and Canntab Therapeutics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canntab Therapeutics and Groove Botanicals 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 Groove Botanicals are associated (or correlated) with Canntab Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canntab Therapeutics has no effect on the direction of Groove Botanicals i.e., Groove Botanicals and Canntab Therapeutics go up and down completely randomly.

Pair Corralation between Groove Botanicals and Canntab Therapeutics

If you would invest  0.25  in Groove Botanicals on October 25, 2024 and sell it today you would earn a total of  0.75  from holding Groove Botanicals or generate 300.0% return on investment over 90 days.

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

Groove Botanicals  vs.  Canntab Therapeutics Limited

Groove Botanicals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Groove Botanicals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Groove Botanicals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Canntab Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Groove Botanicals and Canntab Therapeutics

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

The idea behind Groove Botanicals and Canntab Therapeutics Limited 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.