Correlation Between Amazonas Florestal and CannTrust Holdings

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

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

Diversification Opportunities for Amazonas Florestal and CannTrust Holdings

0.12

Correlation Coefficient

Amazonas Florestal  CannTrust Holdings

Average diversification

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

Pair Corralation between Amazonas Florestal and CannTrust Holdings

If you would invest  0.01  in Amazonas Florestal on September 21, 2024 and sell it today you would lose (0.01) from holding Amazonas Florestal or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Amazonas Florestal  vs.  CannTrust Holdings

Amazonas Florestal

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazonas Florestal are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Amazonas Florestal disclosed solid returns over the last few months and may actually be approaching a breakup point.

CannTrust Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CannTrust Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, CannTrust Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Amazonas Florestal and CannTrust Holdings

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

The idea behind Amazonas Florestal and CannTrust 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.