Correlation Between Australis Capital and Flowr Corp

Can any of the company-specific risk be diversified away by investing in both Australis Capital and Flowr Corp 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 Australis Capital and Flowr Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Australis Capital and Flowr Corp

0.0

Correlation Coefficient

Australis Capital  Flowr Corp

Pay attention - limited upside

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

Pair Corralation between Australis Capital and Flowr Corp

Assuming the 90 days horizon Australis Capital is expected to generate 1.0 times more return on investment than Flowr Corp. However, Australis Capital is 1.0 times more volatile than Flowr Corp. It trades about 0.09 of its potential returns per unit of risk. Flowr Corp is currently generating about 0.08 per unit of risk. If you would invest  4.40  in Australis Capital on September 29, 2024 and sell it today you would lose (4.39) from holding Australis Capital or give up 99.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	82.66%
Values	Daily Returns

Australis Capital  vs.  Flowr Corp

Australis Capital

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Australis Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent 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.

Flowr Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Australis Capital and Flowr Corp

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

The idea behind Australis Capital and Flowr 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.