Correlation Between StateHouse Holdings and Cann American

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

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

Diversification Opportunities for StateHouse Holdings and Cann American

0.12

Correlation Coefficient

StateHouse Holdings  Cann American

Average diversification

The 3 months correlation between StateHouse and Cann is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding StateHouse Holdings and Cann American Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cann American Corp and StateHouse Holdings 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 StateHouse Holdings are associated (or correlated) with Cann American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cann American Corp has no effect on the direction of StateHouse Holdings i.e., StateHouse Holdings and Cann American go up and down completely randomly.

Pair Corralation between StateHouse Holdings and Cann American

Assuming the 90 days horizon StateHouse Holdings is expected to generate 0.6 times more return on investment than Cann American. However, StateHouse Holdings is 1.68 times less risky than Cann American. It trades about 0.01 of its potential returns per unit of risk. Cann American Corp is currently generating about -0.02 per unit of risk. If you would invest  2.00  in StateHouse Holdings on September 12, 2024 and sell it today you would lose (0.50) from holding StateHouse Holdings or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

StateHouse Holdings  vs.  Cann American Corp

StateHouse Holdings

Risk-Adjusted Performance

0 of 100

Insignificant

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

Cann American Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cann American Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with StateHouse Holdings and Cann American

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

The idea behind StateHouse Holdings and Cann American Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.