Correlation Between Medical Cannabis and Cognetivity Neurosciences

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

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

Diversification Opportunities for Medical Cannabis and Cognetivity Neurosciences

-0.2

Correlation Coefficient

Medical Cannabis  Cognetivity Neurosciences

Good diversification

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

Pair Corralation between Medical Cannabis and Cognetivity Neurosciences

Given the investment horizon of 90 days Medical Cannabis Pay is expected to generate 8.78 times more return on investment than Cognetivity Neurosciences. However, Medical Cannabis is 8.78 times more volatile than Cognetivity Neurosciences. It trades about 0.29 of its potential returns per unit of risk. Cognetivity Neurosciences is currently generating about 0.12 per unit of risk. If you would invest  0.08  in Medical Cannabis Pay on September 3, 2024 and sell it today you would lose (0.07) from holding Medical Cannabis Pay or give up 87.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Medical Cannabis Pay  vs.  Cognetivity Neurosciences

Medical Cannabis Pay

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Cannabis Pay are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Medical Cannabis reported solid returns over the last few months and may actually be approaching a breakup point.

Cognetivity Neurosciences

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cognetivity Neurosciences are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Cognetivity Neurosciences reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medical Cannabis and Cognetivity Neurosciences

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

The idea behind Medical Cannabis Pay and Cognetivity Neurosciences 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.