Correlation Between Flora Growth and 1933 Industries

Can any of the company-specific risk be diversified away by investing in both Flora Growth and 1933 Industries 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 Flora Growth and 1933 Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flora Growth Corp and 1933 Industries, you can compare the effects of market volatilities on Flora Growth and 1933 Industries 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 Flora Growth with a short position of 1933 Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flora Growth and 1933 Industries.

Diversification Opportunities for Flora Growth and 1933 Industries

0.02

Correlation Coefficient

Flora Growth  1933 Industries

Significant diversification

The 3 months correlation between Flora and 1933 is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Flora Growth Corp and 1933 Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1933 Industries and Flora Growth 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 Flora Growth Corp are associated (or correlated) with 1933 Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1933 Industries has no effect on the direction of Flora Growth i.e., Flora Growth and 1933 Industries go up and down completely randomly.

Pair Corralation between Flora Growth and 1933 Industries

Given the investment horizon of 90 days Flora Growth Corp is expected to under-perform the 1933 Industries. But the stock apears to be less risky and, when comparing its historical volatility, Flora Growth Corp is 1.69 times less risky than 1933 Industries. The stock trades about -0.07 of its potential returns per unit of risk. The 1933 Industries is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  0.65  in 1933 Industries on September 20, 2024 and sell it today you would lose (0.21) from holding 1933 Industries or give up 32.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Flora Growth Corp  vs.  1933 Industries

Flora Growth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flora Growth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

1933 Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 1933 Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, 1933 Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Flora Growth and 1933 Industries

The main advantage of trading using opposite Flora Growth and 1933 Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flora Growth position performs unexpectedly, 1933 Industries 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 1933 Industries will offset losses from the drop in 1933 Industries' long position.

The idea behind Flora Growth Corp and 1933 Industries 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.