Correlation Between Aleafia Health and Avicanna

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Can any of the company-specific risk be diversified away by investing in both Aleafia Health and Avicanna 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 Aleafia Health and Avicanna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aleafia Health and Avicanna, you can compare the effects of market volatilities on Aleafia Health and Avicanna 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 Aleafia Health with a short position of Avicanna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aleafia Health and Avicanna.

Diversification Opportunities for Aleafia Health and Avicanna

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Aleafia and Avicanna is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aleafia Health and Avicanna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avicanna and Aleafia Health 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 Aleafia Health are associated (or correlated) with Avicanna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avicanna has no effect on the direction of Aleafia Health i.e., Aleafia Health and Avicanna go up and down completely randomly.

Pair Corralation between Aleafia Health and Avicanna

Assuming the 90 days horizon Aleafia Health is expected to under-perform the Avicanna. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aleafia Health is 1.68 times less risky than Avicanna. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Avicanna is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Avicanna on September 29, 2024 and sell it today you would lose (20.00) from holding Avicanna or give up 50.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy78.43%
ValuesDaily Returns

Aleafia Health  vs.  Avicanna

 Performance 
       Timeline  
Aleafia Health 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

0 of 100

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

Aleafia Health and Avicanna Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aleafia Health and Avicanna

The main advantage of trading using opposite Aleafia Health and Avicanna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aleafia Health position performs unexpectedly, Avicanna 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 Avicanna will offset losses from the drop in Avicanna's long position.
The idea behind Aleafia Health and Avicanna 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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