Correlation Between Cannara Biotech and Elixinol Global

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

By analyzing existing cross correlation between Cannara Biotech and Elixinol Global, you can compare the effects of market volatilities on Cannara Biotech and Elixinol Global 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 Cannara Biotech with a short position of Elixinol Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cannara Biotech and Elixinol Global.

Diversification Opportunities for Cannara Biotech and Elixinol Global

-0.4

Correlation Coefficient

Cannara Biotech  Elixinol Global

Very good diversification

The 3 months correlation between Cannara and Elixinol is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cannara Biotech and Elixinol Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elixinol Global and Cannara Biotech 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 Cannara Biotech are associated (or correlated) with Elixinol Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elixinol Global has no effect on the direction of Cannara Biotech i.e., Cannara Biotech and Elixinol Global go up and down completely randomly.

Pair Corralation between Cannara Biotech and Elixinol Global

Assuming the 90 days horizon Cannara Biotech is expected to generate 4.74 times less return on investment than Elixinol Global. But when comparing it to its historical volatility, Cannara Biotech is 10.11 times less risky than Elixinol Global. It trades about 0.25 of its potential returns per unit of risk. Elixinol Global is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1.88  in Elixinol Global on December 30, 2024 and sell it today you would lose (0.68) from holding Elixinol Global or give up 36.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Cannara Biotech  vs.  Elixinol Global

Cannara Biotech

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cannara Biotech are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Cannara Biotech reported solid returns over the last few months and may actually be approaching a breakup point.

Elixinol Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elixinol Global are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Elixinol Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cannara Biotech and Elixinol Global

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

The idea behind Cannara Biotech and Elixinol Global 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 Global Correlations module to find global opportunities by holding instruments from different markets.