Correlation Between Aurora Cannabis and Connect Biopharma
Can any of the company-specific risk be diversified away by investing in both Aurora Cannabis and Connect Biopharma 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 Aurora Cannabis and Connect Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Cannabis and Connect Biopharma Holdings, you can compare the effects of market volatilities on Aurora Cannabis and Connect Biopharma 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 Aurora Cannabis with a short position of Connect Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Cannabis and Connect Biopharma.
Diversification Opportunities for Aurora Cannabis and Connect Biopharma
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aurora and Connect is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Cannabis and Connect Biopharma Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connect Biopharma and Aurora Cannabis 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 Aurora Cannabis are associated (or correlated) with Connect Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connect Biopharma has no effect on the direction of Aurora Cannabis i.e., Aurora Cannabis and Connect Biopharma go up and down completely randomly.
Pair Corralation between Aurora Cannabis and Connect Biopharma
Considering the 90-day investment horizon Aurora Cannabis is expected to generate 110.43 times less return on investment than Connect Biopharma. But when comparing it to its historical volatility, Aurora Cannabis is 1.15 times less risky than Connect Biopharma. It trades about 0.0 of its potential returns per unit of risk. Connect Biopharma Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 87.00 in Connect Biopharma Holdings on September 4, 2024 and sell it today you would earn a total of 21.00 from holding Connect Biopharma Holdings or generate 24.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Cannabis vs. Connect Biopharma Holdings
Performance |
| Timeline |
| Aurora Cannabis |
| Connect Biopharma |
Aurora Cannabis and Connect Biopharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Cannabis and Connect Biopharma
The main advantage of trading using opposite Aurora Cannabis and Connect Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Cannabis position performs unexpectedly, Connect Biopharma 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 Connect Biopharma will offset losses from the drop in Connect Biopharma's long position.| Aurora Cannabis vs. Crinetics Pharmaceuticals | Aurora Cannabis vs. Enanta Pharmaceuticals | Aurora Cannabis vs. Amicus Therapeutics | Aurora Cannabis vs. Connect Biopharma Holdings |
| Connect Biopharma vs. Assembly Biosciences | Connect Biopharma vs. Instil Bio | Connect Biopharma vs. CytomX Therapeutics | Connect Biopharma vs. Achilles Therapeutics PLC |
Check out your portfolio center.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.
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