Correlation Between Orchid Ventures and 4Front Ventures

Can any of the company-specific risk be diversified away by investing in both Orchid Ventures and 4Front Ventures 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 Orchid Ventures and 4Front Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Orchid Ventures and 4Front Ventures Corp, you can compare the effects of market volatilities on Orchid Ventures and 4Front Ventures 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 Orchid Ventures with a short position of 4Front Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orchid Ventures and 4Front Ventures.

Diversification Opportunities for Orchid Ventures and 4Front Ventures

0.0

Correlation Coefficient

Orchid Ventures  4Front Ventures

Pay attention - limited upside

The 3 months correlation between Orchid and 4Front is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Orchid Ventures and 4Front Ventures Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4Front Ventures Corp and Orchid Ventures 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 Orchid Ventures are associated (or correlated) with 4Front Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4Front Ventures Corp has no effect on the direction of Orchid Ventures i.e., Orchid Ventures and 4Front Ventures go up and down completely randomly.

Pair Corralation between Orchid Ventures and 4Front Ventures

Assuming the 90 days horizon Orchid Ventures is expected to under-perform the 4Front Ventures. But the pink sheet apears to be less risky and, when comparing its historical volatility, Orchid Ventures is 1.94 times less risky than 4Front Ventures. The pink sheet trades about -0.03 of its potential returns per unit of risk. The 4Front Ventures Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  27.00  in 4Front Ventures Corp on September 12, 2024 and sell it today you would lose (24.80) from holding 4Front Ventures Corp or give up 91.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Orchid Ventures  vs.  4Front Ventures Corp

Orchid Ventures

Risk-Adjusted Performance

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Very Weak

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

4Front Ventures Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 4Front Ventures Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic 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.

Pair Trading with Orchid Ventures and 4Front Ventures

The main advantage of trading using opposite Orchid Ventures and 4Front Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orchid Ventures position performs unexpectedly, 4Front Ventures 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 4Front Ventures will offset losses from the drop in 4Front Ventures' long position.

The idea behind Orchid Ventures and 4Front Ventures Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.