Correlation Between Cronos and Aurora Cannabis

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

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

Diversification Opportunities for Cronos and Aurora Cannabis

0.31

Correlation Coefficient

Cronos  Aurora Cannabis

Weak diversification

The 3 months correlation between Cronos and Aurora is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cronos Group and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Cronos 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 Cronos Group are associated (or correlated) with Aurora Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Cannabis has no effect on the direction of Cronos i.e., Cronos and Aurora Cannabis go up and down completely randomly.

Pair Corralation between Cronos and Aurora Cannabis

Assuming the 90 days trading horizon Cronos Group is expected to generate 0.52 times more return on investment than Aurora Cannabis. However, Cronos Group is 1.93 times less risky than Aurora Cannabis. It trades about 0.11 of its potential returns per unit of risk. Aurora Cannabis is currently generating about 0.04 per unit of risk. If you would invest  248.00  in Cronos Group on April 23, 2025 and sell it today you would earn a total of  36.00  from holding Cronos Group or generate 14.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Cronos Group  vs.  Aurora Cannabis

Cronos Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cronos Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cronos displayed solid returns over the last few months and may actually be approaching a breakup point.

Aurora Cannabis

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Cannabis are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Aurora Cannabis may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Cronos and Aurora Cannabis

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

The idea behind Cronos Group and Aurora Cannabis 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.