Correlation Between Sohm and Medical Marijuana
Can any of the company-specific risk be diversified away by investing in both Sohm and Medical Marijuana 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 Sohm and Medical Marijuana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sohm Inc and Medical Marijuana I, you can compare the effects of market volatilities on Sohm and Medical Marijuana 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 Sohm with a short position of Medical Marijuana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sohm and Medical Marijuana.
Diversification Opportunities for Sohm and Medical Marijuana
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sohm and Medical is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sohm Inc and Medical Marijuana I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Marijuana and Sohm 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 Sohm Inc are associated (or correlated) with Medical Marijuana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Marijuana has no effect on the direction of Sohm i.e., Sohm and Medical Marijuana go up and down completely randomly.
Pair Corralation between Sohm and Medical Marijuana
If you would invest 0.08 in Sohm Inc on September 4, 2024 and sell it today you would earn a total of 0.00 from holding Sohm Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.4% |
| Values | Daily Returns |
Sohm Inc vs. Medical Marijuana I
Performance |
| Timeline |
| Sohm Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Medical Marijuana |
Sohm and Medical Marijuana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sohm and Medical Marijuana
The main advantage of trading using opposite Sohm and Medical Marijuana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sohm position performs unexpectedly, Medical Marijuana 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 Marijuana will offset losses from the drop in Medical Marijuana's long position.The idea behind Sohm Inc and Medical Marijuana I 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.| Medical Marijuana vs. American Green | Medical Marijuana vs. North American Cannabis | Medical Marijuana vs. Marijuana | Medical Marijuana vs. Rimrock Gold Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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