Correlation Between Choom Holdings and Terrascend Corp

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

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

Diversification Opportunities for Choom Holdings and Terrascend Corp

-0.39

Correlation Coefficient

Choom Holdings  Terrascend Corp

Very good diversification

The 3 months correlation between Choom and Terrascend is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Choom Holdings and Terrascend Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terrascend Corp and Choom Holdings 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 Choom Holdings are associated (or correlated) with Terrascend Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terrascend Corp has no effect on the direction of Choom Holdings i.e., Choom Holdings and Terrascend Corp go up and down completely randomly.

Pair Corralation between Choom Holdings and Terrascend Corp

Assuming the 90 days horizon Choom Holdings is expected to generate 31.2 times more return on investment than Terrascend Corp. However, Choom Holdings is 31.2 times more volatile than Terrascend Corp. It trades about 0.11 of its potential returns per unit of risk. Terrascend Corp is currently generating about 0.08 per unit of risk. If you would invest  0.15  in Choom Holdings on September 20, 2024 and sell it today you would lose (0.15) from holding Choom Holdings or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	28.34%
Values	Daily Returns

Choom Holdings  vs.  Terrascend Corp

Choom Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Choom Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Terrascend Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Choom Holdings and Terrascend Corp

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

The idea behind Choom Holdings and Terrascend Corp 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.