Correlation Between Kali and Leef Brands

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

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

Diversification Opportunities for Kali and Leef Brands

0.38

Correlation Coefficient

Kali  Leef Brands

Weak diversification

The 3 months correlation between Kali and Leef is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Kali Inc and Leef Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leef Brands and Kali 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 Kali Inc are associated (or correlated) with Leef Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leef Brands has no effect on the direction of Kali i.e., Kali and Leef Brands go up and down completely randomly.

Pair Corralation between Kali and Leef Brands

Given the investment horizon of 90 days Kali Inc is expected to generate 14.72 times more return on investment than Leef Brands. However, Kali is 14.72 times more volatile than Leef Brands. It trades about 0.11 of its potential returns per unit of risk. Leef Brands is currently generating about -0.03 per unit of risk. If you would invest  0.01  in Kali Inc on December 27, 2024 and sell it today you would lose (0.01) from holding Kali Inc or give up 50.0% of portfolio value over 90 days.

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

Kali Inc  vs.  Leef Brands

Kali Inc

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kali Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Kali showed solid returns over the last few months and may actually be approaching a breakup point.

Leef Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leef Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Kali and Leef Brands

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

The idea behind Kali Inc and Leef Brands 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.