Correlation Between Acacia Diversified and Levitee Labs

Can any of the company-specific risk be diversified away by investing in both Acacia Diversified and Levitee Labs 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 Acacia Diversified and Levitee Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acacia Diversified Holdings and Levitee Labs, you can compare the effects of market volatilities on Acacia Diversified and Levitee Labs 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 Acacia Diversified with a short position of Levitee Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acacia Diversified and Levitee Labs.

Diversification Opportunities for Acacia Diversified and Levitee Labs

1.0

Correlation Coefficient

Acacia Diversified  Levitee Labs

No risk reduction

The 3 months correlation between Acacia and Levitee is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Acacia Diversified Holdings and Levitee Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levitee Labs and Acacia Diversified 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 Acacia Diversified Holdings are associated (or correlated) with Levitee Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levitee Labs has no effect on the direction of Acacia Diversified i.e., Acacia Diversified and Levitee Labs go up and down completely randomly.

Pair Corralation between Acacia Diversified and Levitee Labs

If you would invest  0.27  in Levitee Labs on October 22, 2024 and sell it today you would earn a total of  0.00  from holding Levitee Labs or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	5.56%
Values	Daily Returns

Acacia Diversified Holdings  vs.  Levitee Labs

Acacia Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acacia Diversified Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Acacia Diversified is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Levitee Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Levitee Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Levitee Labs is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Acacia Diversified and Levitee Labs

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

The idea behind Acacia Diversified Holdings and Levitee Labs 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.