Correlation Between Nextmart and Cannabis One

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

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

Diversification Opportunities for Nextmart and Cannabis One

0.0

Correlation Coefficient

Nextmart  Cannabis One

Pay attention - limited upside

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

Pair Corralation between Nextmart and Cannabis One

If you would invest  0.04  in Nextmart on September 24, 2024 and sell it today you would lose (0.03) from holding Nextmart or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Nextmart  vs.  Cannabis One Holdings

Nextmart

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nextmart are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Nextmart reported solid returns over the last few months and may actually be approaching a breakup point.

Cannabis One Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nextmart and Cannabis One

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

The idea behind Nextmart and Cannabis One Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.