Correlation Between Bri Chem and Auxly Cannabis
Can any of the company-specific risk be diversified away by investing in both Bri Chem and Auxly 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 Bri Chem and Auxly Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bri Chem Corp and Auxly Cannabis Group, you can compare the effects of market volatilities on Bri Chem and Auxly 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 Bri Chem with a short position of Auxly Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bri Chem and Auxly Cannabis.
Diversification Opportunities for Bri Chem and Auxly Cannabis
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bri and Auxly is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bri Chem Corp and Auxly Cannabis Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auxly Cannabis Group and Bri Chem 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 Bri Chem Corp are associated (or correlated) with Auxly Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auxly Cannabis Group has no effect on the direction of Bri Chem i.e., Bri Chem and Auxly Cannabis go up and down completely randomly.
Pair Corralation between Bri Chem and Auxly Cannabis
Assuming the 90 days trading horizon Bri Chem is expected to generate 1.18 times less return on investment than Auxly Cannabis. But when comparing it to its historical volatility, Bri Chem Corp is 1.34 times less risky than Auxly Cannabis. It trades about 0.08 of its potential returns per unit of risk. Auxly Cannabis Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Auxly Cannabis Group on November 2, 2024 and sell it today you would earn a total of 1.00 from holding Auxly Cannabis Group or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bri Chem Corp vs. Auxly Cannabis Group
Performance |
| Timeline |
| Bri Chem Corp |
| Auxly Cannabis Group |
Bri Chem and Auxly Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bri Chem and Auxly Cannabis
The main advantage of trading using opposite Bri Chem and Auxly Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bri Chem position performs unexpectedly, Auxly 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 Auxly Cannabis will offset losses from the drop in Auxly Cannabis' long position.The idea behind Bri Chem Corp and Auxly Cannabis Group 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.| Auxly Cannabis vs. OrganiGram Holdings | Auxly Cannabis vs. Tilray Inc | Auxly Cannabis vs. Lifeist Wellness | Auxly Cannabis vs. Medipharm Labs Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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