Correlation Between Aurora Cannabis and DarioHealth Corp

Can any of the company-specific risk be diversified away by investing in both Aurora Cannabis and DarioHealth Corp 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 DarioHealth Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aurora Cannabis and DarioHealth Corp, you can compare the effects of market volatilities on Aurora Cannabis and DarioHealth Corp 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 DarioHealth Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Cannabis and DarioHealth Corp.

Diversification Opportunities for Aurora Cannabis and DarioHealth Corp

-0.58

Correlation Coefficient

Aurora Cannabis  DarioHealth Corp

Excellent diversification

The 3 months correlation between Aurora and DarioHealth is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Cannabis and DarioHealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DarioHealth Corp 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 DarioHealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DarioHealth Corp has no effect on the direction of Aurora Cannabis i.e., Aurora Cannabis and DarioHealth Corp go up and down completely randomly.

Pair Corralation between Aurora Cannabis and DarioHealth Corp

Considering the 90-day investment horizon Aurora Cannabis is expected to generate 1.34 times less return on investment than DarioHealth Corp. In addition to that, Aurora Cannabis is 2.14 times more volatile than DarioHealth Corp. It trades about 0.03 of its total potential returns per unit of risk. DarioHealth Corp is currently generating about 0.09 per unit of volatility. If you would invest  145.00  in DarioHealth Corp on February 11, 2024 and sell it today you would earn a total of  12.00  from holding DarioHealth Corp or generate 8.28% return on investment over 90 days.

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

Aurora Cannabis  vs.  DarioHealth Corp

Aurora Cannabis

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Cannabis are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, Aurora Cannabis sustained solid returns over the last few months and may actually be approaching a breakup point.

DarioHealth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DarioHealth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Aurora Cannabis and DarioHealth Corp

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

The idea behind Aurora Cannabis and DarioHealth Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.