Correlation Between Canopy Growth and Aslan Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Canopy Growth and Aslan Pharmaceuticals 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 Canopy Growth and Aslan Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canopy Growth Corp and Aslan Pharmaceuticals Ltd, you can compare the effects of market volatilities on Canopy Growth and Aslan Pharmaceuticals 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 Canopy Growth with a short position of Aslan Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canopy Growth and Aslan Pharmaceuticals.

Diversification Opportunities for Canopy Growth and Aslan Pharmaceuticals

-0.59

Correlation Coefficient

Canopy Growth  Aslan Pharmaceuticals

Excellent diversification

The 3 months correlation between Canopy and Aslan is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Canopy Growth Corp and Aslan Pharmaceuticals Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aslan Pharmaceuticals and Canopy 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 Canopy Growth Corp are associated (or correlated) with Aslan Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aslan Pharmaceuticals has no effect on the direction of Canopy Growth i.e., Canopy Growth and Aslan Pharmaceuticals go up and down completely randomly.

Pair Corralation between Canopy Growth and Aslan Pharmaceuticals

Considering the 90-day investment horizon Canopy Growth Corp is expected to generate 2.85 times more return on investment than Aslan Pharmaceuticals. However, Canopy Growth is 2.85 times more volatile than Aslan Pharmaceuticals Ltd. It trades about 0.16 of its potential returns per unit of risk. Aslan Pharmaceuticals Ltd is currently generating about -0.09 per unit of risk. If you would invest  277.00  in Canopy Growth Corp on March 14, 2024 and sell it today you would earn a total of  482.00  from holding Canopy Growth Corp or generate 174.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Canopy Growth Corp  vs.  Aslan Pharmaceuticals Ltd

Canopy Growth Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canopy Growth Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Canopy Growth exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aslan Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aslan Pharmaceuticals Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Canopy Growth and Aslan Pharmaceuticals

The main advantage of trading using opposite Canopy Growth and Aslan Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canopy Growth position performs unexpectedly, Aslan Pharmaceuticals 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 Aslan Pharmaceuticals will offset losses from the drop in Aslan Pharmaceuticals' long position.

The idea behind Canopy Growth Corp and Aslan Pharmaceuticals Ltd 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.