Correlation Between Medical Cannabis and HMS Holdings

Can any of the company-specific risk be diversified away by investing in both Medical Cannabis and HMS Holdings 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 Medical Cannabis and HMS Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Medical Cannabis Pay and HMS Holdings Corp, you can compare the effects of market volatilities on Medical Cannabis and HMS Holdings 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 Medical Cannabis with a short position of HMS Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Cannabis and HMS Holdings.

Diversification Opportunities for Medical Cannabis and HMS Holdings

0.0

Correlation Coefficient

Medical Cannabis  HMS Holdings

Pay attention - limited upside

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

Pair Corralation between Medical Cannabis and HMS Holdings

If you would invest  0.14  in Medical Cannabis Pay on February 28, 2024 and sell it today you would lose (0.13) from holding Medical Cannabis Pay or give up 92.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Medical Cannabis Pay  vs.  HMS Holdings Corp

Medical Cannabis Pay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Cannabis Pay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental 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.

HMS Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Medical Cannabis and HMS Holdings

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

The idea behind Medical Cannabis Pay and HMS Holdings 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.