Correlation Between Flowr Corp and Aleafia Health

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

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

Diversification Opportunities for Flowr Corp and Aleafia Health

0.0

Correlation Coefficient

Flowr Corp  Aleafia Health

Pay attention - limited upside

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

Pair Corralation between Flowr Corp and Aleafia Health

Assuming the 90 days horizon Flowr Corp is expected to generate 22.4 times more return on investment than Aleafia Health. However, Flowr Corp is 22.4 times more volatile than Aleafia Health. It trades about 0.08 of its potential returns per unit of risk. Aleafia Health is currently generating about -0.05 per unit of risk. If you would invest  1.90  in Flowr Corp on September 29, 2024 and sell it today you would lose (1.90) from holding Flowr Corp or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.88%
Values	Daily Returns

Flowr Corp  vs.  Aleafia Health

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.

Aleafia Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Flowr Corp and Aleafia Health

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

The idea behind Flowr Corp and Aleafia Health 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.