Correlation Between Item 9 and THC Therapeutics

Can any of the company-specific risk be diversified away by investing in both Item 9 and THC 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 Item 9 and THC Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Item 9 Labs and THC Therapeutics, you can compare the effects of market volatilities on Item 9 and THC 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 Item 9 with a short position of THC Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Item 9 and THC Therapeutics.

Diversification Opportunities for Item 9 and THC Therapeutics

0.07

Correlation Coefficient

Item 9  THC Therapeutics

Significant diversification

The 3 months correlation between Item and THC is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Item 9 Labs and THC Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THC Therapeutics and Item 9 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 Item 9 Labs are associated (or correlated) with THC Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THC Therapeutics has no effect on the direction of Item 9 i.e., Item 9 and THC Therapeutics go up and down completely randomly.

Pair Corralation between Item 9 and THC Therapeutics

Given the investment horizon of 90 days Item 9 Labs is expected to generate 34.44 times more return on investment than THC Therapeutics. However, Item 9 is 34.44 times more volatile than THC Therapeutics. It trades about 0.2 of its potential returns per unit of risk. THC Therapeutics is currently generating about 0.29 per unit of risk. If you would invest  0.01  in Item 9 Labs on October 21, 2024 and sell it today you would earn a total of  0.00  from holding Item 9 Labs or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Item 9 Labs  vs.  THC Therapeutics

Item 9 Labs

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Item 9 Labs are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent essential indicators, Item 9 sustained solid returns over the last few months and may actually be approaching a breakup point.

THC Therapeutics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in THC Therapeutics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, THC Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Item 9 and THC Therapeutics

The main advantage of trading using opposite Item 9 and THC Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Item 9 position performs unexpectedly, THC 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 THC Therapeutics will offset losses from the drop in THC Therapeutics' long position.

The idea behind Item 9 Labs and THC Therapeutics 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 Commodity Directory module to find actively traded commodities issued by global exchanges.