Correlation Between Flora Growth and Stem Holdings
Can any of the company-specific risk be diversified away by investing in both Flora Growth and Stem Holdings 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 Stem Holdings 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 Stem Holdings, you can compare the effects of market volatilities on Flora Growth and Stem Holdings 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 Stem Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flora Growth and Stem Holdings.
Diversification Opportunities for Flora Growth and Stem Holdings
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Flora and Stem is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Flora Growth Corp and Stem Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stem Holdings 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 Stem Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stem Holdings has no effect on the direction of Flora Growth i.e., Flora Growth and Stem Holdings go up and down completely randomly.
Pair Corralation between Flora Growth and Stem Holdings
Given the investment horizon of 90 days Flora Growth Corp is expected to generate 1.13 times more return on investment than Stem Holdings. However, Flora Growth is 1.13 times more volatile than Stem Holdings. It trades about 0.07 of its potential returns per unit of risk. Stem Holdings is currently generating about -0.09 per unit of risk. If you would invest 115.00 in Flora Growth Corp on August 29, 2024 and sell it today you would earn a total of 42.00 from holding Flora Growth Corp or generate 36.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flora Growth Corp vs. Stem Holdings
Performance |
| Timeline |
| Flora Growth Corp |
| Stem Holdings |
Flora Growth and Stem Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flora Growth and Stem Holdings
The main advantage of trading using opposite Flora Growth and Stem Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flora Growth position performs unexpectedly, Stem Holdings 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 Stem Holdings will offset losses from the drop in Stem Holdings' long position.| Flora Growth vs. Phibro Animal Health | Flora Growth vs. Procaps Group SA | Flora Growth vs. Amphastar P | Flora Growth vs. Alkermes Plc |
| Stem Holdings vs. Orchid Ventures | Stem Holdings vs. TransCanna Holdings | Stem Holdings vs. BioQuest Corp | Stem Holdings vs. Item 9 Labs |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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