Correlation Between Aurora Cannabis and CRISPR Therapeutics

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Can any of the company-specific risk be diversified away by investing in both Aurora Cannabis and CRISPR Therapeutics 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 Aurora Cannabis and CRISPR Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Cannabis and CRISPR Therapeutics AG, you can compare the effects of market volatilities on Aurora Cannabis and CRISPR Therapeutics 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 Aurora Cannabis with a short position of CRISPR Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Cannabis and CRISPR Therapeutics.

Diversification Opportunities for Aurora Cannabis and CRISPR Therapeutics

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Aurora and CRISPR is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Cannabis and CRISPR Therapeutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRISPR Therapeutics and Aurora Cannabis 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 Aurora Cannabis are associated (or correlated) with CRISPR Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRISPR Therapeutics has no effect on the direction of Aurora Cannabis i.e., Aurora Cannabis and CRISPR Therapeutics go up and down completely randomly.

Pair Corralation between Aurora Cannabis and CRISPR Therapeutics

Considering the 90-day investment horizon Aurora Cannabis is expected to under-perform the CRISPR Therapeutics. In addition to that, Aurora Cannabis is 1.64 times more volatile than CRISPR Therapeutics AG. It trades about -0.01 of its total potential returns per unit of risk. CRISPR Therapeutics AG is currently generating about 0.0 per unit of volatility. If you would invest  9,940  in CRISPR Therapeutics AG on July 2, 2022 and sell it today you would lose (3,405)  from holding CRISPR Therapeutics AG or give up 34.26% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Aurora Cannabis  vs.  CRISPR Therapeutics AG

 Performance (%) 
       Timeline  
Aurora Cannabis 
Aurora Performance
0 of 100
Over the last 90 days Aurora Cannabis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Aurora Cannabis is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Aurora Price Channel

CRISPR Therapeutics 
CRISPR Performance
0 of 100
Over the last 90 days CRISPR Therapeutics AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CRISPR Therapeutics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.

CRISPR Price Channel

Aurora Cannabis and CRISPR Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aurora Cannabis and CRISPR Therapeutics

The main advantage of trading using opposite Aurora Cannabis and CRISPR Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Cannabis position performs unexpectedly, CRISPR Therapeutics 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 CRISPR Therapeutics will offset losses from the drop in CRISPR Therapeutics' long position.
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The idea behind Aurora Cannabis and CRISPR Therapeutics AG 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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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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