Correlation Between Greater Cannabis and Covalon Technologies

Can any of the company-specific risk be diversified away by investing in both Greater Cannabis and Covalon Technologies 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 Greater Cannabis and Covalon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Greater Cannabis and Covalon Technologies

-0.41

Correlation Coefficient

Greater Cannabis  Covalon Technologies

Very good diversification

The 3 months correlation between Greater and Covalon is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Greater Cannabis and Covalon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covalon Technologies and Greater Cannabis 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 Greater Cannabis are associated (or correlated) with Covalon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covalon Technologies has no effect on the direction of Greater Cannabis i.e., Greater Cannabis and Covalon Technologies go up and down completely randomly.

Pair Corralation between Greater Cannabis and Covalon Technologies

Given the investment horizon of 90 days Greater Cannabis is expected to under-perform the Covalon Technologies. In addition to that, Greater Cannabis is 4.56 times more volatile than Covalon Technologies. It trades about 0.0 of its total potential returns per unit of risk. Covalon Technologies is currently generating about 0.09 per unit of volatility. If you would invest  220.00  in Covalon Technologies on September 13, 2024 and sell it today you would earn a total of  34.00  from holding Covalon Technologies or generate 15.45% return on investment over 90 days.

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

Greater Cannabis  vs.  Covalon Technologies

Greater Cannabis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greater Cannabis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Greater Cannabis is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Covalon Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Covalon Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Covalon Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Greater Cannabis and Covalon Technologies

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

The idea behind Greater Cannabis and Covalon Technologies 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 Transaction History module to view history of all your transactions and understand their impact on performance.