Correlation Between GB Sciences and Covalon Technologies

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

By analyzing existing cross correlation between GB Sciences and Covalon Technologies, you can compare the effects of market volatilities on GB Sciences and Covalon Technologies 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 GB Sciences with a short position of Covalon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of GB Sciences and Covalon Technologies.

Diversification Opportunities for GB Sciences and Covalon Technologies

0.0

Correlation Coefficient

GB Sciences  Covalon Technologies

Pay attention - limited upside

The 3 months correlation between GBLX and Covalon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GB Sciences and Covalon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covalon Technologies and GB Sciences 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 GB Sciences are associated (or correlated) with Covalon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covalon Technologies has no effect on the direction of GB Sciences i.e., GB Sciences and Covalon Technologies go up and down completely randomly.

Pair Corralation between GB Sciences and Covalon Technologies

If you would invest  1.00  in GB Sciences on February 2, 2024 and sell it today you would earn a total of  0.00  from holding GB Sciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GB Sciences  vs.  Covalon Technologies

GB Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GB Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, GB Sciences is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Covalon Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Covalon Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GB Sciences and Covalon Technologies

The main advantage of trading using opposite GB Sciences and Covalon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GB Sciences position performs unexpectedly, Covalon Technologies 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 Covalon Technologies will offset losses from the drop in Covalon Technologies' long position.

The idea behind GB Sciences and Covalon Technologies 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..