Correlation Between Akanda Corp and Catalent

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

By analyzing existing cross correlation between Akanda Corp and Catalent, you can compare the effects of market volatilities on Akanda Corp and Catalent 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 Catalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akanda Corp and Catalent.

Diversification Opportunities for Akanda Corp and Catalent

0.64

Correlation Coefficient

Akanda Corp  Catalent

Poor diversification

The 3 months correlation between Akanda and Catalent is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Akanda Corp and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent 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 Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of Akanda Corp i.e., Akanda Corp and Catalent go up and down completely randomly.

Pair Corralation between Akanda Corp and Catalent

Given the investment horizon of 90 days Akanda Corp is expected to generate 2.47 times less return on investment than Catalent. In addition to that, Akanda Corp is 9.18 times more volatile than Catalent. It trades about 0.02 of its total potential returns per unit of risk. Catalent is currently generating about 0.36 per unit of volatility. If you would invest  6,237  in Catalent on October 10, 2024 and sell it today you would earn a total of  111.00  from holding Catalent or generate 1.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	40.0%
Values	Daily Returns

Akanda Corp  vs.  Catalent

Akanda Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akanda Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Catalent

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Catalent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Catalent is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Akanda Corp and Catalent

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

The idea behind Akanda Corp and Catalent 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.