Correlation Between 180 Life and CannBioRx Life

Can any of the company-specific risk be diversified away by investing in both 180 Life and CannBioRx Life 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 180 Life and CannBioRx Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 180 Life Sciences and CannBioRx Life Sciences, you can compare the effects of market volatilities on 180 Life and CannBioRx Life 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 180 Life with a short position of CannBioRx Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of 180 Life and CannBioRx Life.

Diversification Opportunities for 180 Life and CannBioRx Life

0.78

Correlation Coefficient

180 Life  CannBioRx Life

Poor diversification

The 3 months correlation between 180 and CannBioRx is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding 180 Life Sciences and CannBioRx Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CannBioRx Life Sciences and 180 Life 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 180 Life Sciences are associated (or correlated) with CannBioRx Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CannBioRx Life Sciences has no effect on the direction of 180 Life i.e., 180 Life and CannBioRx Life go up and down completely randomly.

Pair Corralation between 180 Life and CannBioRx Life

Given the investment horizon of 90 days 180 Life is expected to generate 2.24 times less return on investment than CannBioRx Life. In addition to that, 180 Life is 1.15 times more volatile than CannBioRx Life Sciences. It trades about 0.02 of its total potential returns per unit of risk. CannBioRx Life Sciences is currently generating about 0.04 per unit of volatility. If you would invest  6.20  in CannBioRx Life Sciences on September 12, 2024 and sell it today you would lose (5.20) from holding CannBioRx Life Sciences or give up 83.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.59%
Values	Daily Returns

180 Life Sciences  vs.  CannBioRx Life Sciences

180 Life Sciences

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 180 Life Sciences are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, 180 Life reported solid returns over the last few months and may actually be approaching a breakup point.

CannBioRx Life Sciences

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CannBioRx Life Sciences are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, CannBioRx Life showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 180 Life and CannBioRx Life

The main advantage of trading using opposite 180 Life and CannBioRx Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 180 Life position performs unexpectedly, CannBioRx Life 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 CannBioRx Life will offset losses from the drop in CannBioRx Life's long position.

The idea behind 180 Life Sciences and CannBioRx Life Sciences 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.

Check out your portfolio center.

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.