Correlation Between Eagle Pharmaceuticals and Akanda Corp

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

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

Diversification Opportunities for Eagle Pharmaceuticals and Akanda Corp

0.59

Correlation Coefficient

Eagle Pharmaceuticals  Akanda Corp

Very weak diversification

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

Pair Corralation between Eagle Pharmaceuticals and Akanda Corp

Given the investment horizon of 90 days Eagle Pharmaceuticals is expected to under-perform the Akanda Corp. In addition to that, Eagle Pharmaceuticals is 1.94 times more volatile than Akanda Corp. It trades about -0.32 of its total potential returns per unit of risk. Akanda Corp is currently generating about -0.08 per unit of volatility. If you would invest  232.00  in Akanda Corp on September 5, 2024 and sell it today you would lose (62.00) from holding Akanda Corp or give up 26.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	34.92%
Values	Daily Returns

Eagle Pharmaceuticals  vs.  Akanda Corp

Eagle Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Pharmaceuticals 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 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.

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 conflicting 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.

Pair Trading with Eagle Pharmaceuticals and Akanda Corp

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

The idea behind Eagle Pharmaceuticals and Akanda 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.