Correlation Between Canopy Growth and Ubiquitech Software

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

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

Diversification Opportunities for Canopy Growth and Ubiquitech Software

0.24

Correlation Coefficient

Canopy Growth  Ubiquitech Software

Modest diversification

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

Pair Corralation between Canopy Growth and Ubiquitech Software

Considering the 90-day investment horizon Canopy Growth Corp is expected to under-perform the Ubiquitech Software. But the stock apears to be less risky and, when comparing its historical volatility, Canopy Growth Corp is 62.38 times less risky than Ubiquitech Software. The stock trades about -0.13 of its potential returns per unit of risk. The Ubiquitech Software is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Ubiquitech Software on September 19, 2024 and sell it today you would lose (0.01) from holding Ubiquitech Software or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Canopy Growth Corp  vs.  Ubiquitech Software

Canopy Growth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canopy Growth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ubiquitech Software

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ubiquitech Software are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Ubiquitech Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canopy Growth and Ubiquitech Software

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

The idea behind Canopy Growth Corp and Ubiquitech Software 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.