Correlation Between Painreform and Clever Leaves

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

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

Diversification Opportunities for Painreform and Clever Leaves

0.2

Correlation Coefficient

Painreform  Clever Leaves

Modest diversification

The 3 months correlation between Painreform and Clever is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Painreform and Clever Leaves Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clever Leaves Holdings and Painreform 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 Painreform are associated (or correlated) with Clever Leaves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clever Leaves Holdings has no effect on the direction of Painreform i.e., Painreform and Clever Leaves go up and down completely randomly.

Pair Corralation between Painreform and Clever Leaves

Given the investment horizon of 90 days Painreform is expected to under-perform the Clever Leaves. But the stock apears to be less risky and, when comparing its historical volatility, Painreform is 26.57 times less risky than Clever Leaves. The stock trades about -0.07 of its potential returns per unit of risk. The Clever Leaves Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Clever Leaves Holdings on December 30, 2024 and sell it today you would lose (2.48) from holding Clever Leaves Holdings or give up 99.2% of portfolio value over 90 days.

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

Painreform  vs.  Clever Leaves Holdings

Painreform

Risk-Adjusted Performance

Very Weak

Over the last 90 days Painreform has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Clever Leaves Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clever Leaves Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Clever Leaves reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Painreform and Clever Leaves

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

The idea behind Painreform and Clever Leaves Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.