Correlation Between LQwD FinTech and Aurora Cannabis

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

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

Diversification Opportunities for LQwD FinTech and Aurora Cannabis

-0.37

Correlation Coefficient

LQwD FinTech  Aurora Cannabis

Very good diversification

The 3 months correlation between LQwD and Aurora is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding LQwD FinTech Corp and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and LQwD FinTech 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 LQwD FinTech 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 LQwD FinTech i.e., LQwD FinTech and Aurora Cannabis go up and down completely randomly.

Pair Corralation between LQwD FinTech and Aurora Cannabis

Assuming the 90 days trading horizon LQwD FinTech Corp is expected to generate 1.18 times more return on investment than Aurora Cannabis. However, LQwD FinTech is 1.18 times more volatile than Aurora Cannabis. It trades about 0.05 of its potential returns per unit of risk. Aurora Cannabis is currently generating about 0.02 per unit of risk. If you would invest  90.00  in LQwD FinTech Corp on December 8, 2024 and sell it today you would earn a total of  45.00  from holding LQwD FinTech Corp or generate 50.0% return on investment over 90 days.

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

LQwD FinTech Corp  vs.  Aurora Cannabis

LQwD FinTech Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days LQwD FinTech 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 basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Aurora Cannabis

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Cannabis are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Aurora Cannabis displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LQwD FinTech and Aurora Cannabis

The main advantage of trading using opposite LQwD FinTech and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LQwD FinTech 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 LQwD FinTech 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.