Correlation Between Smartmetric and Global Cannabis

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

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

Diversification Opportunities for Smartmetric and Global Cannabis

0.04

Correlation Coefficient

Smartmetric  Global Cannabis

Significant diversification

The 3 months correlation between Smartmetric and Global is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Smartmetric and Global Cannabis Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Cannabis Appl and Smartmetric 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 Smartmetric are associated (or correlated) with Global Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Cannabis Appl has no effect on the direction of Smartmetric i.e., Smartmetric and Global Cannabis go up and down completely randomly.

Pair Corralation between Smartmetric and Global Cannabis

Given the investment horizon of 90 days Smartmetric is expected to generate 16.19 times more return on investment than Global Cannabis. However, Smartmetric is 16.19 times more volatile than Global Cannabis Applications. It trades about 0.27 of its potential returns per unit of risk. Global Cannabis Applications is currently generating about 0.07 per unit of risk. If you would invest  0.02  in Smartmetric on September 1, 2024 and sell it today you would lose (0.01) from holding Smartmetric or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Smartmetric  vs.  Global Cannabis Applications

Smartmetric

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Smartmetric are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, Smartmetric exhibited solid returns over the last few months and may actually be approaching a breakup point.

Global Cannabis Appl

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Cannabis Applications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Global Cannabis reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smartmetric and Global Cannabis

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

The idea behind Smartmetric and Global Cannabis Applications 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.