Correlation Between Hexo Corp and Aurora Cannabis

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

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

Diversification Opportunities for Hexo Corp and Aurora Cannabis

0.75

Correlation Coefficient

Hexo Corp  Aurora Cannabis

Poor diversification

The 3 months correlation between Hexo and Aurora is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hexo Corp and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Hexo 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 Hexo Corp are associated (or correlated) with Aurora Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Cannabis has no effect on the direction of Hexo Corp i.e., Hexo Corp and Aurora Cannabis go up and down completely randomly.

Pair Corralation between Hexo Corp and Aurora Cannabis

If you would invest  71.00  in Hexo Corp on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Hexo Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Hexo Corp  vs.  Aurora Cannabis

Hexo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hexo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Hexo Corp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Aurora Cannabis

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hexo Corp and Aurora Cannabis

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

The idea behind Hexo Corp and Aurora Cannabis 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.