Correlation Between C21 Investments and Item 9

Can any of the company-specific risk be diversified away by investing in both C21 Investments and Item 9 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 C21 Investments and Item 9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between C21 Investments and Item 9 Labs, you can compare the effects of market volatilities on C21 Investments and Item 9 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 C21 Investments with a short position of Item 9. Check out your portfolio center. Please also check ongoing floating volatility patterns of C21 Investments and Item 9.

Diversification Opportunities for C21 Investments and Item 9

-0.16

Correlation Coefficient

C21 Investments  Item 9

Good diversification

The 3 months correlation between C21 and Item is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding C21 Investments and Item 9 Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Item 9 Labs and C21 Investments 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 C21 Investments are associated (or correlated) with Item 9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Item 9 Labs has no effect on the direction of C21 Investments i.e., C21 Investments and Item 9 go up and down completely randomly.

Pair Corralation between C21 Investments and Item 9

Assuming the 90 days horizon C21 Investments is expected to generate 155.18 times less return on investment than Item 9. But when comparing it to its historical volatility, C21 Investments is 23.78 times less risky than Item 9. It trades about 0.03 of its potential returns per unit of risk. Item 9 Labs is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.16  in Item 9 Labs on September 14, 2024 and sell it today you would lose (0.15) from holding Item 9 Labs or give up 93.75% of portfolio value over 90 days.

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

C21 Investments  vs.  Item 9 Labs

C21 Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C21 Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, C21 Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Item 9 Labs

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Item 9 Labs are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile essential indicators, Item 9 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with C21 Investments and Item 9

The main advantage of trading using opposite C21 Investments and Item 9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C21 Investments position performs unexpectedly, Item 9 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 Item 9 will offset losses from the drop in Item 9's long position.

The idea behind C21 Investments and Item 9 Labs 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.