Correlation Between Decibel Cannabis and Akanda Corp
Can any of the company-specific risk be diversified away by investing in both Decibel Cannabis and Akanda Corp 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 Decibel Cannabis and Akanda Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Decibel Cannabis and Akanda Corp, you can compare the effects of market volatilities on Decibel Cannabis and Akanda Corp 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 Decibel Cannabis with a short position of Akanda Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Decibel Cannabis and Akanda Corp.
Diversification Opportunities for Decibel Cannabis and Akanda Corp
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Decibel and Akanda is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Decibel Cannabis and Akanda Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akanda Corp and Decibel 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 Decibel Cannabis are associated (or correlated) with Akanda Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akanda Corp has no effect on the direction of Decibel Cannabis i.e., Decibel Cannabis and Akanda Corp go up and down completely randomly.
Pair Corralation between Decibel Cannabis and Akanda Corp
Assuming the 90 days horizon Decibel Cannabis is expected to generate 1.73 times more return on investment than Akanda Corp. However, Decibel Cannabis is 1.73 times more volatile than Akanda Corp. It trades about 0.03 of its potential returns per unit of risk. Akanda Corp is currently generating about -0.09 per unit of risk. If you would invest 4.78 in Decibel Cannabis on August 31, 2024 and sell it today you would lose (0.28) from holding Decibel Cannabis or give up 5.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Decibel Cannabis vs. Akanda Corp
Performance |
| Timeline |
| Decibel Cannabis |
| Akanda Corp |
Decibel Cannabis and Akanda Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Decibel Cannabis and Akanda Corp
The main advantage of trading using opposite Decibel Cannabis and Akanda Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Decibel Cannabis position performs unexpectedly, Akanda Corp 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 Akanda Corp will offset losses from the drop in Akanda Corp's long position.| Decibel Cannabis vs. Delta 9 Cannabis | Decibel Cannabis vs. Body and Mind | Decibel Cannabis vs. CLS Holdings USA | Decibel Cannabis vs. Halo Collective |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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