Correlation Between Auxly Cannabis and Mydecine Innovations

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

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

Diversification Opportunities for Auxly Cannabis and Mydecine Innovations

0.15

Correlation Coefficient

Auxly Cannabis  Mydecine Innovations

Average diversification

The 3 months correlation between Auxly and Mydecine is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Auxly Cannabis Group and Mydecine Innovations Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mydecine Innovations and Auxly Cannabis 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 Auxly Cannabis Group are associated (or correlated) with Mydecine Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mydecine Innovations has no effect on the direction of Auxly Cannabis i.e., Auxly Cannabis and Mydecine Innovations go up and down completely randomly.

Pair Corralation between Auxly Cannabis and Mydecine Innovations

Assuming the 90 days horizon Auxly Cannabis is expected to generate 13.25 times less return on investment than Mydecine Innovations. But when comparing it to its historical volatility, Auxly Cannabis Group is 7.83 times less risky than Mydecine Innovations. It trades about 0.07 of its potential returns per unit of risk. Mydecine Innovations Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5.20  in Mydecine Innovations Group on October 8, 2024 and sell it today you would lose (4.80) from holding Mydecine Innovations Group or give up 92.31% of portfolio value over 90 days.

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

Auxly Cannabis Group  vs.  Mydecine Innovations Group

Auxly Cannabis Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Auxly Cannabis Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Auxly Cannabis reported solid returns over the last few months and may actually be approaching a breakup point.

Mydecine Innovations

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mydecine Innovations Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Mydecine Innovations reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Auxly Cannabis and Mydecine Innovations

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

The idea behind Auxly Cannabis Group and Mydecine Innovations 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.