Correlation Between 22nd Century and Charlies Holdings

Can any of the company-specific risk be diversified away by investing in both 22nd Century and Charlies Holdings 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 22nd Century and Charlies Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 22nd Century Group and Charlies Holdings, you can compare the effects of market volatilities on 22nd Century and Charlies Holdings 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 22nd Century with a short position of Charlies Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of 22nd Century and Charlies Holdings.

Diversification Opportunities for 22nd Century and Charlies Holdings

0.21

Correlation Coefficient

22nd Century  Charlies Holdings

Modest diversification

The 3 months correlation between 22nd and Charlies is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding 22nd Century Group and Charlies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charlies Holdings and 22nd Century 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 22nd Century Group are associated (or correlated) with Charlies Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charlies Holdings has no effect on the direction of 22nd Century i.e., 22nd Century and Charlies Holdings go up and down completely randomly.

Pair Corralation between 22nd Century and Charlies Holdings

If you would invest  9.32  in Charlies Holdings on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Charlies Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

22nd Century Group  vs.  Charlies Holdings

22nd Century Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 22nd Century Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Charlies Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charlies Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Charlies Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with 22nd Century and Charlies Holdings

The main advantage of trading using opposite 22nd Century and Charlies Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 22nd Century position performs unexpectedly, Charlies Holdings 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 Charlies Holdings will offset losses from the drop in Charlies Holdings' long position.

The idea behind 22nd Century Group and Charlies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.