Correlation Between Akanda Corp and SNDL

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

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

Diversification Opportunities for Akanda Corp and SNDL

0.21

Correlation Coefficient

Akanda Corp  SNDL

Modest diversification

The 3 months correlation between Akanda and SNDL is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Akanda Corp and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Akanda Corp i.e., Akanda Corp and SNDL go up and down completely randomly.

Pair Corralation between Akanda Corp and SNDL

Given the investment horizon of 90 days Akanda Corp is expected to generate 4.21 times more return on investment than SNDL. However, Akanda Corp is 4.21 times more volatile than SNDL Inc. It trades about 0.06 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.31 per unit of risk. If you would invest  143.00  in Akanda Corp on September 17, 2024 and sell it today you would earn a total of  6.00  from holding Akanda Corp or generate 4.2% return on investment over 90 days.

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

Akanda Corp  vs.  SNDL Inc

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 inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

SNDL Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Akanda Corp and SNDL

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

The idea behind Akanda Corp and SNDL Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.