Correlation Between HempAmericana and Now Corp

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

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

Diversification Opportunities for HempAmericana and Now Corp

0.0

Correlation Coefficient

HempAmericana  Now Corp

Pay attention - limited upside

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

Pair Corralation between HempAmericana and Now Corp

Given the investment horizon of 90 days HempAmericana is expected to under-perform the Now Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, HempAmericana is 14.44 times less risky than Now Corp. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Now Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Now Corp on September 19, 2024 and sell it today you would earn a total of  0.00  from holding Now Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

HempAmericana  vs.  Now Corp

HempAmericana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HempAmericana has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Now Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Now Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Now Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HempAmericana and Now Corp

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

The idea behind HempAmericana and Now 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.