Correlation Between Curaleaf Holdings and China Pharma

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

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

Diversification Opportunities for Curaleaf Holdings and China Pharma

0.57

Correlation Coefficient

Curaleaf Holdings  China Pharma

Very weak diversification

The 3 months correlation between Curaleaf and China is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Curaleaf Holdings and China Pharma Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Pharma Holdings and Curaleaf 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 Curaleaf Holdings are associated (or correlated) with China Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Pharma Holdings has no effect on the direction of Curaleaf Holdings i.e., Curaleaf Holdings and China Pharma go up and down completely randomly.

Pair Corralation between Curaleaf Holdings and China Pharma

Assuming the 90 days horizon Curaleaf Holdings is expected to under-perform the China Pharma. But the otc stock apears to be less risky and, when comparing its historical volatility, Curaleaf Holdings is 1.05 times less risky than China Pharma. The otc stock trades about -0.07 of its potential returns per unit of risk. The China Pharma Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  19.00  in China Pharma Holdings on September 1, 2024 and sell it today you would earn a total of  1.00  from holding China Pharma Holdings or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Curaleaf Holdings  vs.  China Pharma Holdings

Curaleaf Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Curaleaf 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 essential indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

China Pharma Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Pharma Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, China Pharma demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Curaleaf Holdings and China Pharma

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

The idea behind Curaleaf Holdings and China Pharma Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.