Correlation Between Flora Growth and Kezar Life
Can any of the company-specific risk be diversified away by investing in both Flora Growth and Kezar Life 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 Flora Growth and Kezar Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flora Growth Corp and Kezar Life Sciences, you can compare the effects of market volatilities on Flora Growth and Kezar Life 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 Flora Growth with a short position of Kezar Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flora Growth and Kezar Life.
Diversification Opportunities for Flora Growth and Kezar Life
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flora and Kezar is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Flora Growth Corp and Kezar Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kezar Life Sciences and Flora Growth 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 Flora Growth Corp are associated (or correlated) with Kezar Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kezar Life Sciences has no effect on the direction of Flora Growth i.e., Flora Growth and Kezar Life go up and down completely randomly.
Pair Corralation between Flora Growth and Kezar Life
Given the investment horizon of 90 days Flora Growth Corp is expected to generate 1.81 times more return on investment than Kezar Life. However, Flora Growth is 1.81 times more volatile than Kezar Life Sciences. It trades about 0.01 of its potential returns per unit of risk. Kezar Life Sciences is currently generating about -0.08 per unit of risk. If you would invest 508.00 in Flora Growth Corp on September 12, 2024 and sell it today you would lose (339.00) from holding Flora Growth Corp or give up 66.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flora Growth Corp vs. Kezar Life Sciences
Performance |
| Timeline |
| Flora Growth Corp |
| Kezar Life Sciences |
Flora Growth and Kezar Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flora Growth and Kezar Life
The main advantage of trading using opposite Flora Growth and Kezar Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flora Growth position performs unexpectedly, Kezar Life 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 Kezar Life will offset losses from the drop in Kezar Life's long position.| Flora Growth vs. Clever Leaves Holdings | Flora Growth vs. Painreform | Flora Growth vs. INC Research Holdings | Flora Growth vs. Lowell Farms |
| Kezar Life vs. Century Therapeutics | Kezar Life vs. Mineralys Therapeutics, Common | Kezar Life vs. Nkarta Inc | Kezar Life vs. Surrozen |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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