Correlation Between Pure Harvest and Galexxy Holdings

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

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

Diversification Opportunities for Pure Harvest and Galexxy Holdings

-0.44

Correlation Coefficient

Pure Harvest  Galexxy Holdings

Very good diversification

The 3 months correlation between Pure and Galexxy is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Pure Harvest Cannabis and Galexxy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galexxy Holdings and Pure Harvest 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 Pure Harvest Cannabis are associated (or correlated) with Galexxy Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galexxy Holdings has no effect on the direction of Pure Harvest i.e., Pure Harvest and Galexxy Holdings go up and down completely randomly.

Pair Corralation between Pure Harvest and Galexxy Holdings

Given the investment horizon of 90 days Pure Harvest Cannabis is expected to generate 2.67 times more return on investment than Galexxy Holdings. However, Pure Harvest is 2.67 times more volatile than Galexxy Holdings. It trades about 0.17 of its potential returns per unit of risk. Galexxy Holdings is currently generating about -0.12 per unit of risk. If you would invest  0.10  in Pure Harvest Cannabis on September 12, 2024 and sell it today you would earn a total of  0.17  from holding Pure Harvest Cannabis or generate 170.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Pure Harvest Cannabis  vs.  Galexxy Holdings

Pure Harvest Cannabis

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Harvest Cannabis are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Pure Harvest reported solid returns over the last few months and may actually be approaching a breakup point.

Galexxy Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galexxy Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Pure Harvest and Galexxy Holdings

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

The idea behind Pure Harvest Cannabis and Galexxy 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.