Correlation Between Im Cannabis and Clever Leaves

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

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

Diversification Opportunities for Im Cannabis and Clever Leaves

0.3

Correlation Coefficient

Im Cannabis  Clever Leaves

Weak diversification

The 3 months correlation between IMCC and Clever is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Im Cannabis Corp and Clever Leaves Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clever Leaves Holdings and Im Cannabis 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 Im Cannabis Corp are associated (or correlated) with Clever Leaves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clever Leaves Holdings has no effect on the direction of Im Cannabis i.e., Im Cannabis and Clever Leaves go up and down completely randomly.

Pair Corralation between Im Cannabis and Clever Leaves

Given the investment horizon of 90 days Im Cannabis is expected to generate 60.49 times less return on investment than Clever Leaves. But when comparing it to its historical volatility, Im Cannabis Corp is 12.68 times less risky than Clever Leaves. It trades about 0.02 of its potential returns per unit of risk. Clever Leaves Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  999.00  in Clever Leaves Holdings on September 12, 2024 and sell it today you would lose (996.25) from holding Clever Leaves Holdings or give up 99.72% of portfolio value over 90 days.

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

Im Cannabis Corp  vs.  Clever Leaves Holdings

Im Cannabis Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Im Cannabis Corp are ranked lower than 5 (%) 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.

Clever Leaves Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clever Leaves Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Clever Leaves reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Im Cannabis and Clever Leaves

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

The idea behind Im Cannabis Corp and Clever Leaves 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.