Correlation Between CbdMD and AptarGroup

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

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

Diversification Opportunities for CbdMD and AptarGroup

0.5

Correlation Coefficient

CbdMD  AptarGroup

Very weak diversification

The 3 months correlation between CbdMD and AptarGroup is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding cbdMD Inc and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup and CbdMD 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 cbdMD Inc are associated (or correlated) with AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of CbdMD i.e., CbdMD and AptarGroup go up and down completely randomly.

Pair Corralation between CbdMD and AptarGroup

Assuming the 90 days trading horizon cbdMD Inc is expected to generate 4.93 times more return on investment than AptarGroup. However, CbdMD is 4.93 times more volatile than AptarGroup. It trades about 0.05 of its potential returns per unit of risk. AptarGroup is currently generating about -0.12 per unit of risk. If you would invest  71.00  in cbdMD Inc on September 26, 2024 and sell it today you would earn a total of  3.00  from holding cbdMD Inc or generate 4.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.37%
Values	Daily Returns

cbdMD Inc  vs.  AptarGroup

cbdMD Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in cbdMD Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, CbdMD sustained solid returns over the last few months and may actually be approaching a breakup point.

AptarGroup

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AptarGroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, AptarGroup is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with CbdMD and AptarGroup

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

The idea behind cbdMD Inc and AptarGroup 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.