Correlation Between Cannlabs and Ua Multimedia

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

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

Diversification Opportunities for Cannlabs and Ua Multimedia

-0.31

Correlation Coefficient

Cannlabs  Ua Multimedia

Very good diversification

The 3 months correlation between Cannlabs and UAMM is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cannlabs and Ua Multimedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ua Multimedia and Cannlabs 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 Cannlabs are associated (or correlated) with Ua Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ua Multimedia has no effect on the direction of Cannlabs i.e., Cannlabs and Ua Multimedia go up and down completely randomly.

Pair Corralation between Cannlabs and Ua Multimedia

Given the investment horizon of 90 days Cannlabs is expected to generate 7.32 times less return on investment than Ua Multimedia. In addition to that, Cannlabs is 1.27 times more volatile than Ua Multimedia. It trades about 0.0 of its total potential returns per unit of risk. Ua Multimedia is currently generating about 0.04 per unit of volatility. If you would invest  0.23  in Ua Multimedia on September 15, 2024 and sell it today you would lose (0.06) from holding Ua Multimedia or give up 26.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Cannlabs  vs.  Ua Multimedia

Cannlabs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cannlabs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite weak basic indicators, Cannlabs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ua Multimedia

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ua Multimedia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting primary indicators, Ua Multimedia displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cannlabs and Ua Multimedia

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

The idea behind Cannlabs and Ua Multimedia 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.