Correlation Between Canopy Growth and Oramed Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Canopy Growth and Oramed Pharmaceuticals 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 Canopy Growth and Oramed Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canopy Growth Corp and Oramed Pharmaceuticals, you can compare the effects of market volatilities on Canopy Growth and Oramed Pharmaceuticals 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 Canopy Growth with a short position of Oramed Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canopy Growth and Oramed Pharmaceuticals.

Diversification Opportunities for Canopy Growth and Oramed Pharmaceuticals

-0.77

Correlation Coefficient

Canopy Growth  Oramed Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Canopy and Oramed is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Canopy Growth Corp and Oramed Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oramed Pharmaceuticals and Canopy Growth 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 Canopy Growth Corp are associated (or correlated) with Oramed Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oramed Pharmaceuticals has no effect on the direction of Canopy Growth i.e., Canopy Growth and Oramed Pharmaceuticals go up and down completely randomly.

Pair Corralation between Canopy Growth and Oramed Pharmaceuticals

Considering the 90-day investment horizon Canopy Growth Corp is expected to generate 3.1 times more return on investment than Oramed Pharmaceuticals. However, Canopy Growth is 3.1 times more volatile than Oramed Pharmaceuticals. It trades about 0.09 of its potential returns per unit of risk. Oramed Pharmaceuticals is currently generating about 0.04 per unit of risk. If you would invest  558.00  in Canopy Growth Corp on February 21, 2024 and sell it today you would earn a total of  455.00  from holding Canopy Growth Corp or generate 81.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Canopy Growth Corp  vs.  Oramed Pharmaceuticals

Canopy Growth Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canopy Growth Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Canopy Growth exhibited solid returns over the last few months and may actually be approaching a breakup point.

Oramed Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oramed Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Canopy Growth and Oramed Pharmaceuticals

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

The idea behind Canopy Growth Corp and Oramed Pharmaceuticals 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.