Correlation Between BellRock Brands and Canntab Therapeutics

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

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

Diversification Opportunities for BellRock Brands and Canntab Therapeutics

1.0

Correlation Coefficient

BellRock Brands  Canntab Therapeutics

No risk reduction

The 3 months correlation between BellRock and Canntab is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding BellRock Brands and Canntab Therapeutics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canntab Therapeutics and BellRock Brands 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 BellRock Brands are associated (or correlated) with Canntab Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canntab Therapeutics has no effect on the direction of BellRock Brands i.e., BellRock Brands and Canntab Therapeutics go up and down completely randomly.

Pair Corralation between BellRock Brands and Canntab Therapeutics

Assuming the 90 days horizon BellRock Brands is expected to generate 0.82 times more return on investment than Canntab Therapeutics. However, BellRock Brands is 1.22 times less risky than Canntab Therapeutics. It trades about -0.09 of its potential returns per unit of risk. Canntab Therapeutics Limited is currently generating about -0.13 per unit of risk. If you would invest  0.01  in BellRock Brands on September 14, 2024 and sell it today you would lose (0.01) from holding BellRock Brands or give up 100.0% of portfolio value over 90 days.

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

BellRock Brands  vs.  Canntab Therapeutics Limited

BellRock Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BellRock Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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.

Canntab Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canntab Therapeutics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Canntab Therapeutics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BellRock Brands and Canntab Therapeutics

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

The idea behind BellRock Brands and Canntab Therapeutics Limited 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.