Correlation Between Zenvia and Global Cannabis

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

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

Diversification Opportunities for Zenvia and Global Cannabis

-0.07

Correlation Coefficient

Zenvia  Global Cannabis

Good diversification

The 3 months correlation between Zenvia and Global is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Zenvia Inc 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 Zenvia 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 Zenvia Inc 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 Zenvia i.e., Zenvia and Global Cannabis go up and down completely randomly.

Pair Corralation between Zenvia and Global Cannabis

Given the investment horizon of 90 days Zenvia is expected to generate 6.93 times less return on investment than Global Cannabis. But when comparing it to its historical volatility, Zenvia Inc is 3.74 times less risky than Global Cannabis. It trades about 0.06 of its potential returns per unit of risk. Global Cannabis Applications is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.25  in Global Cannabis Applications on September 17, 2024 and sell it today you would earn a total of  0.14  from holding Global Cannabis Applications or generate 56.0% return on investment over 90 days.

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

Zenvia Inc  vs.  Global Cannabis Applications

Zenvia Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zenvia Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Zenvia showed solid returns over the last few months and may actually be approaching a breakup point.

Global Cannabis Appl

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Cannabis Applications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Global Cannabis reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zenvia and Global Cannabis

The main advantage of trading using opposite Zenvia and Global Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zenvia 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 Zenvia Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..