Correlation Between Powell Max and Leafly Holdings

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

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

Diversification Opportunities for Powell Max and Leafly Holdings

0.59

Correlation Coefficient

Powell Max  Leafly Holdings

Very weak diversification

The 3 months correlation between Powell and Leafly is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Powell Max Limited and Leafly Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leafly Holdings and Powell Max 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 Powell Max Limited are associated (or correlated) with Leafly Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leafly Holdings has no effect on the direction of Powell Max i.e., Powell Max and Leafly Holdings go up and down completely randomly.

Pair Corralation between Powell Max and Leafly Holdings

Given the investment horizon of 90 days Powell Max Limited is expected to under-perform the Leafly Holdings. In addition to that, Powell Max is 1.48 times more volatile than Leafly Holdings. It trades about -0.09 of its total potential returns per unit of risk. Leafly Holdings is currently generating about 0.05 per unit of volatility. If you would invest  158.00  in Leafly Holdings on September 21, 2024 and sell it today you would earn a total of  4.00  from holding Leafly Holdings or generate 2.53% return on investment over 90 days.

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

Powell Max Limited  vs.  Leafly Holdings

Powell Max Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Powell Max Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic 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.

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 fragile 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.

Pair Trading with Powell Max and Leafly Holdings

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

The idea behind Powell Max Limited and Leafly 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.