Correlation Between Hemp and Creative Edge

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

By analyzing existing cross correlation between Hemp Inc and Creative Edge Nutrit, you can compare the effects of market volatilities on Hemp and Creative Edge 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 Hemp with a short position of Creative Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hemp and Creative Edge.

Diversification Opportunities for Hemp and Creative Edge

0.0

Correlation Coefficient

Hemp  Creative Edge

Pay attention - limited upside

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

Pair Corralation between Hemp and Creative Edge

Given the investment horizon of 90 days Hemp Inc is expected to generate 1.19 times more return on investment than Creative Edge. However, Hemp is 1.19 times more volatile than Creative Edge Nutrit. It trades about 0.09 of its potential returns per unit of risk. Creative Edge Nutrit is currently generating about 0.04 per unit of risk. If you would invest  0.04  in Hemp Inc on September 3, 2024 and sell it today you would lose (0.04) from holding Hemp Inc or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Hemp Inc  vs.  Creative Edge Nutrit

Hemp Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hemp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Hemp is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Creative Edge Nutrit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creative Edge Nutrit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Creative Edge is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hemp and Creative Edge

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

The idea behind Hemp Inc and Creative Edge Nutrit 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.