Correlation Between Atlantic Sapphire and Edible Garden

Can any of the company-specific risk be diversified away by investing in both Atlantic Sapphire and Edible Garden 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 Atlantic Sapphire and Edible Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Atlantic Sapphire ASA and Edible Garden AG, you can compare the effects of market volatilities on Atlantic Sapphire and Edible Garden 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 Atlantic Sapphire with a short position of Edible Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantic Sapphire and Edible Garden.

Diversification Opportunities for Atlantic Sapphire and Edible Garden

0.91

Correlation Coefficient

Atlantic Sapphire  Edible Garden

Almost no diversification

The 3 months correlation between Atlantic and Edible is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Atlantic Sapphire ASA and Edible Garden AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edible Garden AG and Atlantic Sapphire 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 Atlantic Sapphire ASA are associated (or correlated) with Edible Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edible Garden AG has no effect on the direction of Atlantic Sapphire i.e., Atlantic Sapphire and Edible Garden go up and down completely randomly.

Pair Corralation between Atlantic Sapphire and Edible Garden

Assuming the 90 days horizon Atlantic Sapphire ASA is expected to generate 1.76 times more return on investment than Edible Garden. However, Atlantic Sapphire is 1.76 times more volatile than Edible Garden AG. It trades about -0.09 of its potential returns per unit of risk. Edible Garden AG is currently generating about -0.19 per unit of risk. If you would invest  258.00  in Atlantic Sapphire ASA on December 23, 2024 and sell it today you would lose (200.00) from holding Atlantic Sapphire ASA or give up 77.52% of portfolio value over 90 days.

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

Atlantic Sapphire ASA  vs.  Edible Garden AG

Atlantic Sapphire ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atlantic Sapphire ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Edible Garden AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edible Garden AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Atlantic Sapphire and Edible Garden

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

The idea behind Atlantic Sapphire ASA and Edible Garden AG 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.