Correlation Between CLS Holdings and Avicanna

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

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

Diversification Opportunities for CLS Holdings and Avicanna

0.12

Correlation Coefficient

CLS Holdings  Avicanna

Average diversification

The 3 months correlation between CLS and Avicanna is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding CLS Holdings USA and Avicanna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avicanna and CLS Holdings 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 CLS Holdings USA 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 CLS Holdings i.e., CLS Holdings and Avicanna go up and down completely randomly.

Pair Corralation between CLS Holdings and Avicanna

Given the investment horizon of 90 days CLS Holdings USA is expected to generate 1.6 times more return on investment than Avicanna. However, CLS Holdings is 1.6 times more volatile than Avicanna. It trades about 0.06 of its potential returns per unit of risk. Avicanna is currently generating about 0.06 per unit of risk. If you would invest  3.05  in CLS Holdings USA on December 28, 2024 and sell it today you would lose (0.05) from holding CLS Holdings USA or give up 1.64% of portfolio value over 90 days.

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

CLS Holdings USA  vs.  Avicanna

CLS Holdings USA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CLS Holdings USA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, CLS Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Avicanna

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avicanna are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Avicanna reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CLS Holdings and Avicanna

The main advantage of trading using opposite CLS Holdings and Avicanna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CLS Holdings 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 CLS Holdings USA 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.