Correlation Between SMX Public and Canna Consumer

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

By analyzing existing cross correlation between SMX Public Limited and Canna Consumer Goods, you can compare the effects of market volatilities on SMX Public and Canna Consumer 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 SMX Public with a short position of Canna Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMX Public and Canna Consumer.

Diversification Opportunities for SMX Public and Canna Consumer

0.23

Correlation Coefficient

SMX Public  Canna Consumer

Modest diversification

The 3 months correlation between SMX and Canna is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and Canna Consumer Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canna Consumer Goods and SMX Public 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 SMX Public Limited are associated (or correlated) with Canna Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canna Consumer Goods has no effect on the direction of SMX Public i.e., SMX Public and Canna Consumer go up and down completely randomly.

Pair Corralation between SMX Public and Canna Consumer

Considering the 90-day investment horizon SMX Public Limited is expected to generate 3.45 times more return on investment than Canna Consumer. However, SMX Public is 3.45 times more volatile than Canna Consumer Goods. It trades about 0.1 of its potential returns per unit of risk. Canna Consumer Goods is currently generating about -0.17 per unit of risk. If you would invest  39.00  in SMX Public Limited on October 10, 2024 and sell it today you would lose (1.00) from holding SMX Public Limited or give up 2.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SMX Public Limited  vs.  Canna Consumer Goods

SMX Public Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMX Public Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, SMX Public is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Canna Consumer Goods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canna Consumer Goods has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady primary indicators, Canna Consumer is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with SMX Public and Canna Consumer

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

The idea behind SMX Public Limited and Canna Consumer Goods 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.