Correlation Between Akanda Corp and MERCK

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

By analyzing existing cross correlation between Akanda Corp and MERCK INC 595, you can compare the effects of market volatilities on Akanda Corp and MERCK 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 Akanda Corp with a short position of MERCK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akanda Corp and MERCK.

Diversification Opportunities for Akanda Corp and MERCK

0.64

Correlation Coefficient

Akanda Corp  MERCK

Poor diversification

The 3 months correlation between Akanda and MERCK is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Akanda Corp and MERCK INC 595 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MERCK INC 595 and Akanda Corp 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 Akanda Corp are associated (or correlated) with MERCK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MERCK INC 595 has no effect on the direction of Akanda Corp i.e., Akanda Corp and MERCK go up and down completely randomly.

Pair Corralation between Akanda Corp and MERCK

Given the investment horizon of 90 days Akanda Corp is expected to under-perform the MERCK. In addition to that, Akanda Corp is 11.59 times more volatile than MERCK INC 595. It trades about -0.08 of its total potential returns per unit of risk. MERCK INC 595 is currently generating about -0.04 per unit of volatility. If you would invest  10,700  in MERCK INC 595 on September 3, 2024 and sell it today you would lose (101.00) from holding MERCK INC 595 or give up 0.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	89.06%
Values	Daily Returns

Akanda Corp  vs.  MERCK INC 595

Akanda Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akanda Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

MERCK INC 595

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MERCK INC 595 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MERCK is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Akanda Corp and MERCK

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

The idea behind Akanda Corp and MERCK INC 595 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.