Correlation Between Trxade and Nova Cannabis

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

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

Diversification Opportunities for Trxade and Nova Cannabis

-0.82

Correlation Coefficient

Trxade  Nova Cannabis

Pay attention - limited upside

The 3 months correlation between Trxade and Nova is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Trxade Group and Nova Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Cannabis and Trxade 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 Trxade Group are associated (or correlated) with Nova Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Cannabis has no effect on the direction of Trxade i.e., Trxade and Nova Cannabis go up and down completely randomly.

Pair Corralation between Trxade and Nova Cannabis

Given the investment horizon of 90 days Trxade Group is expected to generate 6.31 times more return on investment than Nova Cannabis. However, Trxade is 6.31 times more volatile than Nova Cannabis. It trades about 0.0 of its potential returns per unit of risk. Nova Cannabis is currently generating about -0.06 per unit of risk. If you would invest  757.00  in Trxade Group on August 31, 2024 and sell it today you would lose (11.00) from holding Trxade Group or give up 1.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	54.05%
Values	Daily Returns

Trxade Group  vs.  Nova Cannabis

Trxade Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trxade Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Trxade is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Nova Cannabis

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Trxade and Nova Cannabis

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

The idea behind Trxade Group and Nova Cannabis 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.