Correlation Between Aspen Pharmacare and Aurora Cannabis

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

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

Diversification Opportunities for Aspen Pharmacare and Aurora Cannabis

0.0

Correlation Coefficient

Aspen Pharmacare  Aurora Cannabis

Pay attention - limited upside

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

Pair Corralation between Aspen Pharmacare and Aurora Cannabis

Assuming the 90 days horizon Aspen Pharmacare Holdings is expected to generate 1.94 times more return on investment than Aurora Cannabis. However, Aspen Pharmacare is 1.94 times more volatile than Aurora Cannabis. It trades about 0.07 of its potential returns per unit of risk. Aurora Cannabis is currently generating about 0.0 per unit of risk. 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

Aspen Pharmacare Holdings  vs.  Aurora Cannabis

Aspen Pharmacare Holdings

Risk-Adjusted Performance

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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.

Aurora Cannabis

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Aspen Pharmacare and Aurora Cannabis

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

The idea behind Aspen Pharmacare Holdings and Aurora Cannabis 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.