Correlation Between Veeva Systems and Medical Cannabis

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

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

Diversification Opportunities for Veeva Systems and Medical Cannabis

-0.02

Correlation Coefficient

Veeva Systems  Medical Cannabis

Good diversification

The 3 months correlation between Veeva and Medical is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Veeva Systems Class and Medical Cannabis Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Cannabis Pay and Veeva Systems 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 Veeva Systems Class are associated (or correlated) with Medical Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Cannabis Pay has no effect on the direction of Veeva Systems i.e., Veeva Systems and Medical Cannabis go up and down completely randomly.

Pair Corralation between Veeva Systems and Medical Cannabis

Given the investment horizon of 90 days Veeva Systems is expected to generate 482.0 times less return on investment than Medical Cannabis. But when comparing it to its historical volatility, Veeva Systems Class is 111.64 times less risky than Medical Cannabis. It trades about 0.05 of its potential returns per unit of risk. Medical Cannabis Pay is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Medical Cannabis Pay on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Medical Cannabis Pay or generate 0.0% return on investment over 90 days.

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

Veeva Systems Class  vs.  Medical Cannabis Pay

Veeva Systems Class

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Veeva Systems Class are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Veeva Systems may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Medical Cannabis Pay

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Cannabis Pay are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Medical Cannabis reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veeva Systems and Medical Cannabis

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

The idea behind Veeva Systems Class and Medical Cannabis Pay 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.