Correlation Between Global Hemp and Cannabis Suisse
Can any of the company-specific risk be diversified away by investing in both Global Hemp and Cannabis Suisse 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 Global Hemp and Cannabis Suisse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Hemp Group and Cannabis Suisse Corp, you can compare the effects of market volatilities on Global Hemp and Cannabis Suisse 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 Global Hemp with a short position of Cannabis Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Hemp and Cannabis Suisse.
Diversification Opportunities for Global Hemp and Cannabis Suisse
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Cannabis is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Global Hemp Group and Cannabis Suisse Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannabis Suisse Corp and Global Hemp 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 Global Hemp Group are associated (or correlated) with Cannabis Suisse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannabis Suisse Corp has no effect on the direction of Global Hemp i.e., Global Hemp and Cannabis Suisse go up and down completely randomly.
Pair Corralation between Global Hemp and Cannabis Suisse
Assuming the 90 days horizon Global Hemp is expected to generate 24.2 times less return on investment than Cannabis Suisse. But when comparing it to its historical volatility, Global Hemp Group is 6.88 times less risky than Cannabis Suisse. It trades about 0.06 of its potential returns per unit of risk. Cannabis Suisse Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Cannabis Suisse Corp on August 28, 2024 and sell it today you would earn a total of 0.80 from holding Cannabis Suisse Corp or generate 80.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Hemp Group vs. Cannabis Suisse Corp
Performance |
| Timeline |
| Global Hemp Group |
| Cannabis Suisse Corp |
Global Hemp and Cannabis Suisse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Hemp and Cannabis Suisse
The main advantage of trading using opposite Global Hemp and Cannabis Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Hemp position performs unexpectedly, Cannabis Suisse 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 Cannabis Suisse will offset losses from the drop in Cannabis Suisse's long position.The idea behind Global Hemp Group and Cannabis Suisse Corp 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.| Cannabis Suisse vs. Greater Cannabis | Cannabis Suisse vs. Global Hemp Group | Cannabis Suisse vs. Maple Leaf Green | Cannabis Suisse vs. Mc Endvrs |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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