I’ve made a fairly straight forward modification to your code if you want me to send it over. It will decrement stock when orders move from cancelled to a variety of active statuses.

Here is the entire code, copy and paste if you like 🙂

if ( ! defined( 'ABSPATH' ) ) exit; // Exit if accessed directly

if ( ! class_exists( 'WC_Auto_Stock_Restore' ) ) {

	class WC_Auto_Stock_Restore {

		public function __construct() {
			add_action( 'woocommerce_order_status_processing_to_cancelled', array( $this, 'restore_order_stock' ), 10, 1 );
			add_action( 'woocommerce_order_status_completed_to_cancelled', array( $this, 'restore_order_stock' ), 10, 1 );
			add_action( 'woocommerce_order_status_on-hold_to_cancelled', array( $this, 'restore_order_stock' ), 10, 1 );
			add_action( 'woocommerce_order_status_processing_to_refunded', array( $this, 'restore_order_stock' ), 10, 1 );
			add_action( 'woocommerce_order_status_completed_to_refunded', array( $this, 'restore_order_stock' ), 10, 1 );
			add_action( 'woocommerce_order_status_on-hold_to_refunded', array( $this, 'restore_order_stock' ), 10, 1 );
			add_action( 'woocommerce_order_status_cancelled_to_completed', array( $this, 'remove_order_stock' ), 10, 1 );
			add_action( 'woocommerce_order_status_cancelled_to_processing', array( $this, 'remove_order_stock' ), 10, 1 );
			add_action( 'woocommerce_order_status_cancelled_to_on-hold', array( $this, 'remove_order_stock' ), 10, 1 );
			//add_action( 'woocommerce_order_status_changed', array( $this, 'adjust_order_stock' ), 10, 3 );
		} // End __construct()
		
		//public function adjust_order_stock( $order_id, $old_status, $new_status ) {
			//$valid_new_statuses = array( 'complete' );
			//if ( $old_status == cancelled AND $new_status )
		//}
		
		public function remove_order_stock( $order_id ) {
			$order = new WC_Order( $order_id );

			if ( ! get_option('woocommerce_manage_stock') == 'yes' && ! sizeof( $order->get_items() ) > 0 ) {
				return;
			}

			foreach ( $order->get_items() as $item ) {

				if ( $item['product_id'] > 0 ) {
					$_product = $order->get_product_from_item( $item );

					if ( $_product && $_product->exists() && $_product->managing_stock() ) {
						$old_stock = $_product->stock;

						$qty = apply_filters( 'woocommerce_order_item_quantity', $item['qty'], $this, $item );

						$new_quantity = $_product->reduce_stock( $qty );

						do_action( 'woocommerce_auto_stock_restored', $_product, $item );

						$order->add_order_note( sprintf( __( 'Item #%s stock decremented from %s to %s.', 'woocommerce' ), $item['product_id'], $old_stock, $new_quantity) );

						$order->send_stock_notifications( $_product, $new_quantity, $item['qty'] );
					}
				}
			}
		}

		public function restore_order_stock( $order_id ) {
			$order = new WC_Order( $order_id );

			if ( ! get_option('woocommerce_manage_stock') == 'yes' && ! sizeof( $order->get_items() ) > 0 ) {
				return;
			}

			foreach ( $order->get_items() as $item ) {

				if ( $item['product_id'] > 0 ) {
					$_product = $order->get_product_from_item( $item );

					if ( $_product && $_product->exists() && $_product->managing_stock() ) {
						$old_stock = $_product->stock;

						$qty = apply_filters( 'woocommerce_order_item_quantity', $item['qty'], $this, $item );

						$new_quantity = $_product->increase_stock( $qty );

						do_action( 'woocommerce_auto_stock_restored', $_product, $item );

						$order->add_order_note( sprintf( __( 'Item #%s stock incremented from %s to %s.', 'woocommerce' ), $item['product_id'], $old_stock, $new_quantity) );

						$order->send_stock_notifications( $_product, $new_quantity, $item['qty'] );
					}
				}
			}
		} // End restore_order_stock()
	}
	$GLOBALS['wc_auto_stock_restore'] = new WC_Auto_Stock_Restore();
}