Correlation Between Aurora Cannabis and Aspen Pharmacare

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

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

Diversification Opportunities for Aurora Cannabis and Aspen Pharmacare

0.0

Correlation Coefficient

Aurora Cannabis  Aspen Pharmacare

Pay attention - limited upside

The 3 months correlation between Aurora and Aspen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Cannabis and Aspen Pharmacare Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Pharmacare Holdings and Aurora 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 Aurora Cannabis are associated (or correlated) with Aspen Pharmacare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Pharmacare Holdings has no effect on the direction of Aurora Cannabis i.e., Aurora Cannabis and Aspen Pharmacare go up and down completely randomly.

Pair Corralation between Aurora Cannabis and Aspen Pharmacare

Considering the 90-day investment horizon Aurora Cannabis is expected to generate 26.43 times less return on investment than Aspen Pharmacare. But when comparing it to its historical volatility, Aurora Cannabis is 1.94 times less risky than Aspen Pharmacare. It trades about 0.0 of its potential returns per unit of risk. Aspen Pharmacare Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  731.00  in Aspen Pharmacare Holdings on September 19, 2024 and sell it today you would earn a total of  494.00  from holding Aspen Pharmacare Holdings or generate 67.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	79.03%
Values	Daily Returns

Aurora Cannabis  vs.  Aspen Pharmacare Holdings

Aurora Cannabis

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Aurora Cannabis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat 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.

Aspen Pharmacare Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aurora Cannabis and Aspen Pharmacare

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

The idea behind Aurora Cannabis and Aspen Pharmacare 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.