Correlation Between Akanda Corp and Sonoma Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Akanda Corp and Sonoma 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 Akanda Corp and Sonoma Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akanda Corp and Sonoma Pharmaceuticals, you can compare the effects of market volatilities on Akanda Corp and Sonoma 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 Akanda Corp with a short position of Sonoma Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akanda Corp and Sonoma Pharmaceuticals.
Diversification Opportunities for Akanda Corp and Sonoma Pharmaceuticals
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Akanda and Sonoma is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Akanda Corp and Sonoma Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonoma Pharmaceuticals 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 Sonoma Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonoma Pharmaceuticals has no effect on the direction of Akanda Corp i.e., Akanda Corp and Sonoma Pharmaceuticals go up and down completely randomly.
Pair Corralation between Akanda Corp and Sonoma Pharmaceuticals
Given the investment horizon of 90 days Akanda Corp is expected to under-perform the Sonoma Pharmaceuticals. In addition to that, Akanda Corp is 1.13 times more volatile than Sonoma Pharmaceuticals. It trades about -0.05 of its total potential returns per unit of risk. Sonoma Pharmaceuticals is currently generating about -0.01 per unit of volatility. If you would invest 2,280 in Sonoma Pharmaceuticals on August 28, 2024 and sell it today you would lose (1,987) from holding Sonoma Pharmaceuticals or give up 87.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akanda Corp vs. Sonoma Pharmaceuticals
Performance |
| Timeline |
| Akanda Corp |
| Sonoma Pharmaceuticals |
Akanda Corp and Sonoma Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akanda Corp and Sonoma Pharmaceuticals
The main advantage of trading using opposite Akanda Corp and Sonoma Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akanda Corp position performs unexpectedly, Sonoma 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 Sonoma Pharmaceuticals will offset losses from the drop in Sonoma Pharmaceuticals' long position.| Akanda Corp vs. China SXT Pharmaceuticals | Akanda Corp vs. Petros Pharmaceuticals | Akanda Corp vs. GelStat Corp | Akanda Corp vs. Shuttle Pharmaceuticals |
| Sonoma Pharmaceuticals vs. China Pharma Holdings | Sonoma Pharmaceuticals vs. Universe Pharmaceuticals | Sonoma Pharmaceuticals vs. Akanda Corp | Sonoma Pharmaceuticals vs. Petros 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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