Correlation Between Leafly Holdings and Caf Serendipity

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

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

Diversification Opportunities for Leafly Holdings and Caf Serendipity

0.67

Correlation Coefficient

Leafly Holdings  Caf Serendipity

Poor diversification

The 3 months correlation between Leafly and Caf is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Leafly Holdings and Caf Serendipity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caf Serendipity Holdings and Leafly 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 Leafly Holdings are associated (or correlated) with Caf Serendipity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caf Serendipity Holdings has no effect on the direction of Leafly Holdings i.e., Leafly Holdings and Caf Serendipity go up and down completely randomly.

Pair Corralation between Leafly Holdings and Caf Serendipity

Given the investment horizon of 90 days Leafly Holdings is expected to under-perform the Caf Serendipity. But the stock apears to be less risky and, when comparing its historical volatility, Leafly Holdings is 4.14 times less risky than Caf Serendipity. The stock trades about -0.15 of its potential returns per unit of risk. The Caf Serendipity Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.10  in Caf Serendipity Holdings on September 13, 2024 and sell it today you would lose (0.08) from holding Caf Serendipity Holdings or give up 80.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

Leafly Holdings  vs.  Caf Serendipity Holdings

Leafly Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leafly Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Caf Serendipity Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caf Serendipity Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady technical and fundamental indicators, Caf Serendipity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Leafly Holdings and Caf Serendipity

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

The idea behind Leafly Holdings and Caf Serendipity Holdings 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.