Correlation Between THC Therapeutics and Now Corp
Can any of the company-specific risk be diversified away by investing in both THC Therapeutics and Now Corp 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 THC Therapeutics and Now Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THC Therapeutics and Now Corp, you can compare the effects of market volatilities on THC Therapeutics and Now Corp 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 THC Therapeutics with a short position of Now Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of THC Therapeutics and Now Corp.
Diversification Opportunities for THC Therapeutics and Now Corp
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between THC and Now is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding THC Therapeutics and Now Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Corp and THC Therapeutics 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 THC Therapeutics are associated (or correlated) with Now Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Corp has no effect on the direction of THC Therapeutics i.e., THC Therapeutics and Now Corp go up and down completely randomly.
Pair Corralation between THC Therapeutics and Now Corp
Given the investment horizon of 90 days THC Therapeutics is expected to generate 2.51 times less return on investment than Now Corp. But when comparing it to its historical volatility, THC Therapeutics is 1.73 times less risky than Now Corp. It trades about 0.19 of its potential returns per unit of risk. Now Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Now Corp on August 28, 2024 and sell it today you would lose (0.01) from holding Now Corp or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THC Therapeutics vs. Now Corp
Performance |
| Timeline |
| THC Therapeutics |
| Now Corp |
THC Therapeutics and Now Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THC Therapeutics and Now Corp
The main advantage of trading using opposite THC Therapeutics and Now Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THC Therapeutics position performs unexpectedly, Now Corp 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 Now Corp will offset losses from the drop in Now Corp's long position.| THC Therapeutics vs. Rezolute | THC Therapeutics vs. Tempest Therapeutics | THC Therapeutics vs. Forte Biosciences | THC Therapeutics vs. Dyadic International |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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