Correlation Between Hemp and General Cannabis

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

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

Diversification Opportunities for Hemp and General Cannabis

0.0

Correlation Coefficient

Hemp  General Cannabis

Pay attention - limited upside

The 3 months correlation between Hemp and General is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hemp Inc and General Cannabis Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Cannabis Corp and Hemp 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 Hemp Inc are associated (or correlated) with General Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Cannabis Corp has no effect on the direction of Hemp i.e., Hemp and General Cannabis go up and down completely randomly.

Pair Corralation between Hemp and General Cannabis

If you would invest  0.00  in Hemp Inc on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Hemp Inc or generate 0.0% return on investment over 90 days.

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

Hemp Inc  vs.  General Cannabis Corp

Hemp Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hemp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Hemp is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

General Cannabis Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Cannabis Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hemp and General Cannabis

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

The idea behind Hemp Inc and General Cannabis Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.