Correlation Between Leef Brands and Flowr Corp

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

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

Diversification Opportunities for Leef Brands and Flowr Corp

-0.16

Correlation Coefficient

Leef Brands  Flowr Corp

Good diversification

The 3 months correlation between Leef and Flowr is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Leef Brands and Flowr Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowr Corp and Leef Brands 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 Leef Brands are associated (or correlated) with Flowr Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowr Corp has no effect on the direction of Leef Brands i.e., Leef Brands and Flowr Corp go up and down completely randomly.

Pair Corralation between Leef Brands and Flowr Corp

Assuming the 90 days horizon Leef Brands is expected to generate 18.23 times less return on investment than Flowr Corp. But when comparing it to its historical volatility, Leef Brands is 9.68 times less risky than Flowr Corp. It trades about 0.06 of its potential returns per unit of risk. Flowr Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.90  in Flowr Corp on August 29, 2024 and sell it today you would lose (1.90) from holding Flowr Corp or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.49%
Values	Daily Returns

Leef Brands  vs.  Flowr Corp

Leef Brands

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leef Brands are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, Leef Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Flowr Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flowr Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Flowr Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Leef Brands and Flowr Corp

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

The idea behind Leef Brands and Flowr 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.