Correlation Between Buildablock Corp and Canna Consumer

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

By analyzing existing cross correlation between Buildablock Corp and Canna Consumer Goods, you can compare the effects of market volatilities on Buildablock Corp and Canna Consumer 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 Buildablock Corp with a short position of Canna Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buildablock Corp and Canna Consumer.

Diversification Opportunities for Buildablock Corp and Canna Consumer

0.24

Correlation Coefficient

Buildablock Corp  Canna Consumer

Modest diversification

The 3 months correlation between Buildablock and Canna is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Buildablock Corp and Canna Consumer Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canna Consumer Goods and Buildablock Corp 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 Buildablock Corp are associated (or correlated) with Canna Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canna Consumer Goods has no effect on the direction of Buildablock Corp i.e., Buildablock Corp and Canna Consumer go up and down completely randomly.

Pair Corralation between Buildablock Corp and Canna Consumer

Given the investment horizon of 90 days Buildablock Corp is expected to generate 2.38 times more return on investment than Canna Consumer. However, Buildablock Corp is 2.38 times more volatile than Canna Consumer Goods. It trades about 0.07 of its potential returns per unit of risk. Canna Consumer Goods is currently generating about 0.08 per unit of risk. If you would invest  99.00  in Buildablock Corp on September 15, 2024 and sell it today you would lose (39.00) from holding Buildablock Corp or give up 39.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	51.56%
Values	Daily Returns

Buildablock Corp  vs.  Canna Consumer Goods

Buildablock Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Buildablock Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite sluggish fundamental drivers, Buildablock Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Canna Consumer Goods

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canna Consumer Goods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting primary indicators, Canna Consumer revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Buildablock Corp and Canna Consumer

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

The idea behind Buildablock Corp and Canna Consumer Goods 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.