Correlation Between Crescita Therapeutics and Avicanna

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

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

Diversification Opportunities for Crescita Therapeutics and Avicanna

0.49

Correlation Coefficient

Crescita Therapeutics  Avicanna

Very weak diversification

The 3 months correlation between Crescita and Avicanna is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Crescita Therapeutics and Avicanna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avicanna and Crescita Therapeutics 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 Crescita Therapeutics are associated (or correlated) with Avicanna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avicanna has no effect on the direction of Crescita Therapeutics i.e., Crescita Therapeutics and Avicanna go up and down completely randomly.

Pair Corralation between Crescita Therapeutics and Avicanna

Assuming the 90 days horizon Crescita Therapeutics is expected to under-perform the Avicanna. But the pink sheet apears to be less risky and, when comparing its historical volatility, Crescita Therapeutics is 5.37 times less risky than Avicanna. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Avicanna is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Avicanna on December 3, 2024 and sell it today you would lose (3.00) from holding Avicanna or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Crescita Therapeutics  vs.  Avicanna

Crescita Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crescita Therapeutics 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Avicanna

Risk-Adjusted Performance

Weak

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

Pair Trading with Crescita Therapeutics and Avicanna

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

The idea behind Crescita Therapeutics and Avicanna 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.