Correlation Between Greater Cannabis and Global Hemp

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

By analyzing existing cross correlation between Greater Cannabis and Global Hemp Group, you can compare the effects of market volatilities on Greater Cannabis and Global Hemp 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 Global Hemp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greater Cannabis and Global Hemp.

Diversification Opportunities for Greater Cannabis and Global Hemp

0.19

Correlation Coefficient

Greater Cannabis  Global Hemp

Average diversification

The 3 months correlation between Greater and Global is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Greater Cannabis and Global Hemp Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Hemp Group 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 Global Hemp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Hemp Group has no effect on the direction of Greater Cannabis i.e., Greater Cannabis and Global Hemp go up and down completely randomly.

Pair Corralation between Greater Cannabis and Global Hemp

Given the investment horizon of 90 days Greater Cannabis is expected to generate 1.17 times more return on investment than Global Hemp. However, Greater Cannabis is 1.17 times more volatile than Global Hemp Group. It trades about 0.07 of its potential returns per unit of risk. Global Hemp Group is currently generating about 0.0 per unit of risk. If you would invest  0.05  in Greater Cannabis on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Greater Cannabis or generate 0.0% return on investment over 90 days.

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

Greater Cannabis  vs.  Global Hemp Group

Greater Cannabis

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Greater Cannabis are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Greater Cannabis displayed solid returns over the last few months and may actually be approaching a breakup point.

Global Hemp Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Greater Cannabis and Global Hemp

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

The idea behind Greater Cannabis and Global Hemp Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.