Correlation Between Chalice Brands and Auxly Cannabis

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

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

Diversification Opportunities for Chalice Brands and Auxly Cannabis

-0.32

Correlation Coefficient

Chalice Brands  Auxly Cannabis

Very good diversification

The 3 months correlation between Chalice and Auxly is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Chalice Brands and Auxly Cannabis Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auxly Cannabis Group and Chalice Brands 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 Chalice Brands are associated (or correlated) with Auxly Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auxly Cannabis Group has no effect on the direction of Chalice Brands i.e., Chalice Brands and Auxly Cannabis go up and down completely randomly.

Pair Corralation between Chalice Brands and Auxly Cannabis

Assuming the 90 days horizon Chalice Brands is expected to under-perform the Auxly Cannabis. In addition to that, Chalice Brands is 2.49 times more volatile than Auxly Cannabis Group. It trades about -0.17 of its total potential returns per unit of risk. Auxly Cannabis Group is currently generating about -0.02 per unit of volatility. If you would invest  2.80  in Auxly Cannabis Group on September 16, 2024 and sell it today you would lose (0.40) from holding Auxly Cannabis Group or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Chalice Brands  vs.  Auxly Cannabis Group

Chalice Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chalice Brands 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 essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Auxly Cannabis Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Chalice Brands and Auxly Cannabis

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

The idea behind Chalice Brands and Auxly Cannabis Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.