Correlation Between Akanda Corp and Stepan
Can any of the company-specific risk be diversified away by investing in both Akanda Corp and Stepan 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 Akanda Corp and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akanda Corp and Stepan Company, you can compare the effects of market volatilities on Akanda Corp and Stepan 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 Akanda Corp with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akanda Corp and Stepan.
Diversification Opportunities for Akanda Corp and Stepan
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Akanda and Stepan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Akanda Corp and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Akanda Corp 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 Akanda Corp are associated (or correlated) with Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Akanda Corp i.e., Akanda Corp and Stepan go up and down completely randomly.
Pair Corralation between Akanda Corp and Stepan
Given the investment horizon of 90 days Akanda Corp is expected to under-perform the Stepan. In addition to that, Akanda Corp is 1.33 times more volatile than Stepan Company. It trades about -0.38 of its total potential returns per unit of risk. Stepan Company is currently generating about -0.36 per unit of volatility. If you would invest 5,793 in Stepan Company on January 8, 2025 and sell it today you would lose (947.00) from holding Stepan Company or give up 16.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akanda Corp vs. Stepan Company
Performance |
| Timeline |
| Akanda Corp |
| Stepan Company |
Akanda Corp and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akanda Corp and Stepan
The main advantage of trading using opposite Akanda Corp and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akanda Corp position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Akanda Corp vs. China SXT Pharmaceuticals | Akanda Corp vs. Petros Pharmaceuticals | Akanda Corp vs. GelStat Corp | Akanda Corp vs. Shuttle Pharmaceuticals |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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