Correlation Between Khiron Life and Ascend Wellness

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

By analyzing existing cross correlation between Khiron Life Sciences and Ascend Wellness Holdings, you can compare the effects of market volatilities on Khiron Life and Ascend Wellness 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 Khiron Life with a short position of Ascend Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Khiron Life and Ascend Wellness.

Diversification Opportunities for Khiron Life and Ascend Wellness

-0.07

Correlation Coefficient

Khiron Life  Ascend Wellness

Good diversification

The 3 months correlation between Khiron and Ascend is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Khiron Life Sciences and Ascend Wellness Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascend Wellness Holdings and Khiron Life 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 Khiron Life Sciences are associated (or correlated) with Ascend Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascend Wellness Holdings has no effect on the direction of Khiron Life i.e., Khiron Life and Ascend Wellness go up and down completely randomly.

Pair Corralation between Khiron Life and Ascend Wellness

Assuming the 90 days horizon Khiron Life Sciences is expected to generate 22.82 times more return on investment than Ascend Wellness. However, Khiron Life is 22.82 times more volatile than Ascend Wellness Holdings. It trades about 0.11 of its potential returns per unit of risk. Ascend Wellness Holdings is currently generating about -0.08 per unit of risk. If you would invest  0.90  in Khiron Life Sciences on September 13, 2024 and sell it today you would lose (0.89) from holding Khiron Life Sciences or give up 98.89% of portfolio value over 90 days.

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

Khiron Life Sciences  vs.  Ascend Wellness Holdings

Khiron Life Sciences

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Khiron Life Sciences are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Khiron Life reported solid returns over the last few months and may actually be approaching a breakup point.

Ascend Wellness Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ascend Wellness Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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 recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Khiron Life and Ascend Wellness

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

The idea behind Khiron Life Sciences and Ascend Wellness 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.