Correlation Between Hemp and Growlife

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

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

Diversification Opportunities for Hemp and Growlife

0.0

Correlation Coefficient

Hemp  Growlife

Pay attention - limited upside

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

Pair Corralation between Hemp and Growlife

Given the investment horizon of 90 days Hemp is expected to generate 1.77 times less return on investment than Growlife. But when comparing it to its historical volatility, Hemp Inc is 1.52 times less risky than Growlife. It trades about 0.09 of its potential returns per unit of risk. Growlife is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4.80  in Growlife on September 25, 2024 and sell it today you would lose (4.79) from holding Growlife or give up 99.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Hemp Inc  vs.  Growlife

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.

Growlife

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Growlife are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Growlife unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hemp and Growlife

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

The idea behind Hemp Inc and Growlife 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.