Correlation Between PM Capital and Elixinol Wellness

Can any of the company-specific risk be diversified away by investing in both PM Capital and Elixinol Wellness 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 PM Capital and Elixinol Wellness into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PM Capital Global and Elixinol Wellness, you can compare the effects of market volatilities on PM Capital and Elixinol Wellness 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 PM Capital with a short position of Elixinol Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of PM Capital and Elixinol Wellness.

Diversification Opportunities for PM Capital and Elixinol Wellness

-0.56

Correlation Coefficient

PM Capital  Elixinol Wellness

Excellent diversification

The 3 months correlation between PGF and Elixinol is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding PM Capital Global and Elixinol Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elixinol Wellness and PM Capital 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 PM Capital Global are associated (or correlated) with Elixinol Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elixinol Wellness has no effect on the direction of PM Capital i.e., PM Capital and Elixinol Wellness go up and down completely randomly.

Pair Corralation between PM Capital and Elixinol Wellness

Assuming the 90 days trading horizon PM Capital is expected to generate 1.75 times less return on investment than Elixinol Wellness. But when comparing it to its historical volatility, PM Capital Global is 7.93 times less risky than Elixinol Wellness. It trades about 0.14 of its potential returns per unit of risk. Elixinol Wellness is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2.20  in Elixinol Wellness on April 25, 2025 and sell it today you would lose (0.20) from holding Elixinol Wellness or give up 9.09% of portfolio value over 90 days.

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

PM Capital Global  vs.  Elixinol Wellness

PM Capital Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PM Capital Global are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, PM Capital may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Elixinol Wellness

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elixinol Wellness are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Elixinol Wellness unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PM Capital and Elixinol Wellness

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

The idea behind PM Capital Global and Elixinol Wellness 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.