Correlation Between CbdMD and Wuhan General

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

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

Diversification Opportunities for CbdMD and Wuhan General

-0.45

Correlation Coefficient

CbdMD  Wuhan General

Very good diversification

The 3 months correlation between CbdMD and Wuhan is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding cbdMD Inc and Wuhan General Gr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuhan General Gr 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 Wuhan General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuhan General Gr has no effect on the direction of CbdMD i.e., CbdMD and Wuhan General go up and down completely randomly.

Pair Corralation between CbdMD and Wuhan General

Assuming the 90 days trading horizon cbdMD Inc is expected to under-perform the Wuhan General. But the preferred stock apears to be less risky and, when comparing its historical volatility, cbdMD Inc is 17.27 times less risky than Wuhan General. The preferred stock trades about -0.04 of its potential returns per unit of risk. The Wuhan General Gr is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Wuhan General Gr on September 29, 2024 and sell it today you would lose (3.96) from holding Wuhan General Gr or give up 99.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	29.35%
Values	Daily Returns

cbdMD Inc  vs.  Wuhan General Gr

cbdMD Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in cbdMD Inc are ranked lower than 3 (%) 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.

Wuhan General Gr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wuhan General Gr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Wuhan General is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CbdMD and Wuhan General

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

The idea behind cbdMD Inc and Wuhan General Gr 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.