Correlation Between Pure Harvest and Avicanna

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

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

Diversification Opportunities for Pure Harvest and Avicanna

0.42

Correlation Coefficient

Pure Harvest  Avicanna

Very weak diversification

The 3 months correlation between Pure and Avicanna is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Pure Harvest Cannabis and Avicanna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avicanna and Pure Harvest 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 Pure Harvest Cannabis 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 Pure Harvest i.e., Pure Harvest and Avicanna go up and down completely randomly.

Pair Corralation between Pure Harvest and Avicanna

Given the investment horizon of 90 days Pure Harvest Cannabis is expected to generate 3.06 times more return on investment than Avicanna. However, Pure Harvest is 3.06 times more volatile than Avicanna. It trades about 0.17 of its potential returns per unit of risk. Avicanna is currently generating about 0.04 per unit of risk. If you would invest  0.10  in Pure Harvest Cannabis on October 25, 2024 and sell it today you would earn a total of  0.17  from holding Pure Harvest Cannabis or generate 170.0% return on investment over 90 days.

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

Pure Harvest Cannabis  vs.  Avicanna

Pure Harvest Cannabis

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Harvest Cannabis are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Pure Harvest reported solid returns over the last few months and may actually be approaching a breakup point.

Avicanna

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avicanna are ranked lower than 3 (%) 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 Pure Harvest and Avicanna

The main advantage of trading using opposite Pure Harvest and Avicanna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Harvest 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 Pure Harvest Cannabis 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.