Correlation Between CHAR Technologies and Aurora Cannabis

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

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

Diversification Opportunities for CHAR Technologies and Aurora Cannabis

0.52

Correlation Coefficient

CHAR Technologies  Aurora Cannabis

Very weak diversification

The 3 months correlation between CHAR and Aurora is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CHAR Technologies and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and CHAR Technologies 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 CHAR Technologies 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 CHAR Technologies i.e., CHAR Technologies and Aurora Cannabis go up and down completely randomly.

Pair Corralation between CHAR Technologies and Aurora Cannabis

Assuming the 90 days horizon CHAR Technologies is expected to generate 1.86 times more return on investment than Aurora Cannabis. However, CHAR Technologies is 1.86 times more volatile than Aurora Cannabis. It trades about 0.02 of its potential returns per unit of risk. Aurora Cannabis is currently generating about 0.01 per unit of risk. If you would invest  21.00  in CHAR Technologies on October 5, 2024 and sell it today you would earn a total of  0.00  from holding CHAR Technologies or generate 0.0% return on investment over 90 days.

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

CHAR Technologies  vs.  Aurora Cannabis

CHAR Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAR Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated 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. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CHAR Technologies and Aurora Cannabis

The main advantage of trading using opposite CHAR Technologies and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHAR Technologies 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 CHAR Technologies 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.