Correlation Between Bhang and Willow Biosciences

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

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

Diversification Opportunities for Bhang and Willow Biosciences

0.0

Correlation Coefficient

Bhang  Willow Biosciences

Pay attention - limited upside

The 3 months correlation between Bhang and Willow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bhang Inc and Willow Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willow Biosciences and Bhang 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 Bhang Inc are associated (or correlated) with Willow Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willow Biosciences has no effect on the direction of Bhang i.e., Bhang and Willow Biosciences go up and down completely randomly.

Pair Corralation between Bhang and Willow Biosciences

If you would invest  7.00  in Willow Biosciences on September 2, 2024 and sell it today you would lose (0.70) from holding Willow Biosciences or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Bhang Inc  vs.  Willow Biosciences

Bhang Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bhang Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Bhang is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Willow Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Willow Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Willow Biosciences is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bhang and Willow Biosciences

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

The idea behind Bhang Inc and Willow Biosciences 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.