Correlation Between AppHarvest and Edible Garden

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

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

Diversification Opportunities for AppHarvest and Edible Garden

0.0

Correlation Coefficient

AppHarvest  Edible Garden

Pay attention - limited upside

The 3 months correlation between AppHarvest and Edible is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AppHarvest 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 AppHarvest 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 AppHarvest 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 AppHarvest i.e., AppHarvest and Edible Garden go up and down completely randomly.

Pair Corralation between AppHarvest and Edible Garden

Given the investment horizon of 90 days AppHarvest is expected to under-perform the Edible Garden. In addition to that, AppHarvest is 1.07 times more volatile than Edible Garden AG. It trades about -0.19 of its total potential returns per unit of risk. Edible Garden AG is currently generating about -0.08 per unit of volatility. If you would invest  9,560  in Edible Garden AG on October 26, 2024 and sell it today you would lose (9,530) from holding Edible Garden AG or give up 99.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	23.68%
Values	Daily Returns

AppHarvest  vs.  Edible Garden AG

AppHarvest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AppHarvest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, AppHarvest is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Edible Garden AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Edible Garden AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, Edible Garden disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AppHarvest and Edible Garden

The main advantage of trading using opposite AppHarvest and Edible Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AppHarvest 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 AppHarvest 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.