Correlation Between Heritage Cannabis and C21 Investments

Can any of the company-specific risk be diversified away by investing in both Heritage Cannabis and C21 Investments 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 Heritage Cannabis and C21 Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heritage Cannabis Holdings and C21 Investments, you can compare the effects of market volatilities on Heritage Cannabis and C21 Investments 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 Heritage Cannabis with a short position of C21 Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Cannabis and C21 Investments.

Diversification Opportunities for Heritage Cannabis and C21 Investments

0.25

Correlation Coefficient

Heritage Cannabis  C21 Investments

Modest diversification

The 3 months correlation between Heritage and C21 is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Cannabis Holdings and C21 Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C21 Investments and Heritage 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 Heritage Cannabis Holdings are associated (or correlated) with C21 Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C21 Investments has no effect on the direction of Heritage Cannabis i.e., Heritage Cannabis and C21 Investments go up and down completely randomly.

Pair Corralation between Heritage Cannabis and C21 Investments

Assuming the 90 days horizon Heritage Cannabis Holdings is expected to generate 2.99 times more return on investment than C21 Investments. However, Heritage Cannabis is 2.99 times more volatile than C21 Investments. It trades about 0.07 of its potential returns per unit of risk. C21 Investments is currently generating about 0.04 per unit of risk. If you would invest  0.85  in Heritage Cannabis Holdings on September 4, 2024 and sell it today you would lose (0.71) from holding Heritage Cannabis Holdings or give up 83.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.28%
Values	Daily Returns

Heritage Cannabis Holdings  vs.  C21 Investments

Heritage Cannabis

Risk-Adjusted Performance

0 of 100

Very Weak

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

C21 Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in C21 Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, C21 Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Heritage Cannabis and C21 Investments

The main advantage of trading using opposite Heritage Cannabis and C21 Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Cannabis position performs unexpectedly, C21 Investments 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 C21 Investments will offset losses from the drop in C21 Investments' long position.

The idea behind Heritage Cannabis Holdings and C21 Investments 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.