Correlation Between Medmen Enterprises and Alpha Teknova

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

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

Diversification Opportunities for Medmen Enterprises and Alpha Teknova

0.81

Correlation Coefficient

Medmen Enterprises  Alpha Teknova

Very poor diversification

The 3 months correlation between Medmen and Alpha is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Medmen Enterprises Class and Alpha Teknova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Teknova and Medmen Enterprises 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 Medmen Enterprises Class are associated (or correlated) with Alpha Teknova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Teknova has no effect on the direction of Medmen Enterprises i.e., Medmen Enterprises and Alpha Teknova go up and down completely randomly.

Pair Corralation between Medmen Enterprises and Alpha Teknova

If you would invest  458.00  in Alpha Teknova on September 5, 2024 and sell it today you would earn a total of  352.00  from holding Alpha Teknova or generate 76.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.59%
Values	Daily Returns

Medmen Enterprises Class  vs.  Alpha Teknova

Medmen Enterprises Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medmen Enterprises Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Medmen Enterprises is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Alpha Teknova

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Teknova are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Alpha Teknova displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medmen Enterprises and Alpha Teknova

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

The idea behind Medmen Enterprises Class and Alpha Teknova 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.