Correlation Between Flora Growth and Aptose Biosciences

Can any of the company-specific risk be diversified away by investing in both Flora Growth and Aptose Biosciences 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 Aptose Biosciences 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 Aptose Biosciences, you can compare the effects of market volatilities on Flora Growth and Aptose Biosciences 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 Aptose Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flora Growth and Aptose Biosciences.

Diversification Opportunities for Flora Growth and Aptose Biosciences

-0.53

Correlation Coefficient

Flora Growth  Aptose Biosciences

Excellent diversification

The 3 months correlation between Flora and Aptose is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Flora Growth Corp and Aptose Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptose Biosciences 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 Aptose Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptose Biosciences has no effect on the direction of Flora Growth i.e., Flora Growth and Aptose Biosciences go up and down completely randomly.

Pair Corralation between Flora Growth and Aptose Biosciences

Given the investment horizon of 90 days Flora Growth Corp is expected to generate 2.77 times more return on investment than Aptose Biosciences. However, Flora Growth is 2.77 times more volatile than Aptose Biosciences. It trades about 0.11 of its potential returns per unit of risk. Aptose Biosciences is currently generating about -0.2 per unit of risk. If you would invest  84.00  in Flora Growth Corp on February 15, 2024 and sell it today you would earn a total of  44.00  from holding Flora Growth Corp or generate 52.38% return on investment over 90 days.

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

Flora Growth Corp  vs.  Aptose Biosciences

Flora Growth Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flora Growth Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Flora Growth exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aptose Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Flora Growth and Aptose Biosciences

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

The idea behind Flora Growth Corp and Aptose Biosciences 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..