Correlation Between Flora Growth and Procaps Group
Can any of the company-specific risk be diversified away by investing in both Flora Growth and Procaps Group 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 Procaps Group 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 Procaps Group SA, you can compare the effects of market volatilities on Flora Growth and Procaps Group 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 Procaps Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flora Growth and Procaps Group.
Diversification Opportunities for Flora Growth and Procaps Group
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Flora and Procaps is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Flora Growth Corp and Procaps Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procaps Group SA 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 Procaps Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procaps Group SA has no effect on the direction of Flora Growth i.e., Flora Growth and Procaps Group go up and down completely randomly.
Pair Corralation between Flora Growth and Procaps Group
Given the investment horizon of 90 days Flora Growth Corp is expected to under-perform the Procaps Group. But the stock apears to be less risky and, when comparing its historical volatility, Flora Growth Corp is 2.47 times less risky than Procaps Group. The stock trades about -0.86 of its potential returns per unit of risk. The Procaps Group SA is currently generating about -0.33 of returns per unit of risk over similar time horizon. If you would invest 233.00 in Procaps Group SA on November 2, 2024 and sell it today you would lose (74.00) from holding Procaps Group SA or give up 31.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flora Growth Corp vs. Procaps Group SA
Performance |
| Timeline |
| Flora Growth Corp |
| Procaps Group SA |
Flora Growth and Procaps Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flora Growth and Procaps Group
The main advantage of trading using opposite Flora Growth and Procaps Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flora Growth position performs unexpectedly, Procaps Group 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 Procaps Group will offset losses from the drop in Procaps Group's long position.| Flora Growth vs. Clever Leaves Holdings | Flora Growth vs. Painreform | Flora Growth vs. INC Research Holdings | Flora Growth vs. Lowell Farms |
| Procaps Group vs. Phibro Animal Health | Procaps Group vs. Delta 9 Cannabis | Procaps Group vs. City View Green | Procaps Group vs. Benchmark Botanics |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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