Correlation Between INC Research and Akanda Corp

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

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

Diversification Opportunities for INC Research and Akanda Corp

0.86

Correlation Coefficient

INC Research  Akanda Corp

Very poor diversification

The 3 months correlation between INC and Akanda is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding INC Research Holdings and Akanda Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akanda Corp and INC Research 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 INC Research Holdings are associated (or correlated) with Akanda Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akanda Corp has no effect on the direction of INC Research i.e., INC Research and Akanda Corp go up and down completely randomly.

Pair Corralation between INC Research and Akanda Corp

Given the investment horizon of 90 days INC Research Holdings is expected to under-perform the Akanda Corp. But the stock apears to be less risky and, when comparing its historical volatility, INC Research Holdings is 1.0 times less risky than Akanda Corp. The stock trades about -0.13 of its potential returns per unit of risk. The Akanda Corp is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  232.00  in Akanda Corp on August 31, 2024 and sell it today you would lose (62.00) from holding Akanda Corp or give up 26.72% of portfolio value over 90 days.

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

INC Research Holdings  vs.  Akanda Corp

INC Research Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INC Research Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with INC Research and Akanda Corp

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

The idea behind INC Research Holdings and Akanda Corp 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.