Correlation Between Flora Growth and ADMA Biologics

Can any of the company-specific risk be diversified away by investing in both Flora Growth and ADMA Biologics 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 ADMA Biologics 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 ADMA Biologics, you can compare the effects of market volatilities on Flora Growth and ADMA Biologics 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 ADMA Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flora Growth and ADMA Biologics.

Diversification Opportunities for Flora Growth and ADMA Biologics

0.62

Correlation Coefficient

Flora Growth  ADMA Biologics

Poor diversification

The 3 months correlation between Flora and ADMA is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Flora Growth Corp and ADMA Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADMA Biologics 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 ADMA Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADMA Biologics has no effect on the direction of Flora Growth i.e., Flora Growth and ADMA Biologics go up and down completely randomly.

Pair Corralation between Flora Growth and ADMA Biologics

Given the investment horizon of 90 days Flora Growth Corp is expected to under-perform the ADMA Biologics. In addition to that, Flora Growth is 2.48 times more volatile than ADMA Biologics. It trades about -0.16 of its total potential returns per unit of risk. ADMA Biologics is currently generating about -0.13 per unit of volatility. If you would invest  1,995  in ADMA Biologics on December 4, 2024 and sell it today you would lose (412.00) from holding ADMA Biologics or give up 20.65% of portfolio value over 90 days.

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

Flora Growth Corp  vs.  ADMA Biologics

Flora Growth Corp

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ADMA Biologics

Risk-Adjusted Performance

Very Weak

Over the last 90 days ADMA Biologics 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 primary indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Flora Growth and ADMA Biologics

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

The idea behind Flora Growth Corp and ADMA Biologics 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.