Correlation Between Alpha Teknova and Im Cannabis

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

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

Diversification Opportunities for Alpha Teknova and Im Cannabis

-0.65

Correlation Coefficient

Alpha Teknova  Im Cannabis

Excellent diversification

The 3 months correlation between Alpha and IMCC is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Teknova and Im Cannabis Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Im Cannabis Corp and Alpha Teknova 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 Alpha Teknova are associated (or correlated) with Im Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Im Cannabis Corp has no effect on the direction of Alpha Teknova i.e., Alpha Teknova and Im Cannabis go up and down completely randomly.

Pair Corralation between Alpha Teknova and Im Cannabis

Given the investment horizon of 90 days Alpha Teknova is expected to under-perform the Im Cannabis. But the stock apears to be less risky and, when comparing its historical volatility, Alpha Teknova is 3.05 times less risky than Im Cannabis. The stock trades about -0.19 of its potential returns per unit of risk. The Im Cannabis Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  33.00  in Im Cannabis Corp on January 31, 2024 and sell it today you would earn a total of  53.00  from holding Im Cannabis Corp or generate 160.61% return on investment over 90 days.

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

Alpha Teknova  vs.  Im Cannabis Corp

Alpha Teknova

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Teknova has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Im Cannabis Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Im Cannabis Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Im Cannabis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Teknova and Im Cannabis

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

The idea behind Alpha Teknova and Im Cannabis 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.