Correlation Between CLS Holdings and Nippon Shinyaku
Can any of the company-specific risk be diversified away by investing in both CLS Holdings and Nippon Shinyaku 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 CLS Holdings and Nippon Shinyaku into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CLS Holdings USA and Nippon Shinyaku Co, you can compare the effects of market volatilities on CLS Holdings and Nippon Shinyaku 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 CLS Holdings with a short position of Nippon Shinyaku. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLS Holdings and Nippon Shinyaku.
Diversification Opportunities for CLS Holdings and Nippon Shinyaku
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CLS and Nippon is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CLS Holdings USA and Nippon Shinyaku Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Shinyaku and CLS Holdings 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 CLS Holdings USA are associated (or correlated) with Nippon Shinyaku. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Shinyaku has no effect on the direction of CLS Holdings i.e., CLS Holdings and Nippon Shinyaku go up and down completely randomly.
Pair Corralation between CLS Holdings and Nippon Shinyaku
Given the investment horizon of 90 days CLS Holdings USA is expected to generate 3.4 times more return on investment than Nippon Shinyaku. However, CLS Holdings is 3.4 times more volatile than Nippon Shinyaku Co. It trades about 0.05 of its potential returns per unit of risk. Nippon Shinyaku Co is currently generating about -0.03 per unit of risk. If you would invest 5.20 in CLS Holdings USA on August 29, 2024 and sell it today you would lose (0.20) from holding CLS Holdings USA or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
CLS Holdings USA vs. Nippon Shinyaku Co
Performance |
| Timeline |
| CLS Holdings USA |
| Nippon Shinyaku |
CLS Holdings and Nippon Shinyaku Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CLS Holdings and Nippon Shinyaku
The main advantage of trading using opposite CLS Holdings and Nippon Shinyaku positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CLS Holdings position performs unexpectedly, Nippon Shinyaku 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 Nippon Shinyaku will offset losses from the drop in Nippon Shinyaku's long position.| CLS Holdings vs. Benchmark Botanics | CLS Holdings vs. Speakeasy Cannabis Club | CLS Holdings vs. City View Green | CLS Holdings vs. BC Craft Supply |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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