Correlation Between Aurora Cannabis and Singular Genomics

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

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

Diversification Opportunities for Aurora Cannabis and Singular Genomics

-0.26

Correlation Coefficient

Aurora Cannabis  Singular Genomics

Very good diversification

The 3 months correlation between Aurora and Singular is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Cannabis and Singular Genomics Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singular Genomics Systems 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 Singular Genomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singular Genomics Systems has no effect on the direction of Aurora Cannabis i.e., Aurora Cannabis and Singular Genomics go up and down completely randomly.

Pair Corralation between Aurora Cannabis and Singular Genomics

Considering the 90-day investment horizon Aurora Cannabis is expected to generate 2.45 times more return on investment than Singular Genomics. However, Aurora Cannabis is 2.45 times more volatile than Singular Genomics Systems. It trades about 0.16 of its potential returns per unit of risk. Singular Genomics Systems is currently generating about -0.11 per unit of risk. If you would invest  289.00  in Aurora Cannabis on March 14, 2024 and sell it today you would earn a total of  316.00  from holding Aurora Cannabis or generate 109.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Aurora Cannabis  vs.  Singular Genomics Systems

Aurora Cannabis

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Cannabis are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Aurora Cannabis sustained solid returns over the last few months and may actually be approaching a breakup point.

Singular Genomics Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Singular Genomics Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aurora Cannabis and Singular Genomics

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

The idea behind Aurora Cannabis and Singular Genomics Systems 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.