Correlation Between Armada Hflr and Medipharm Labs

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

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

Diversification Opportunities for Armada Hflr and Medipharm Labs

-0.02

Correlation Coefficient

Armada Hflr  Medipharm Labs

Good diversification

The 3 months correlation between Armada and Medipharm is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Medipharm Labs Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medipharm Labs Corp and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Medipharm Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medipharm Labs Corp has no effect on the direction of Armada Hflr i.e., Armada Hflr and Medipharm Labs go up and down completely randomly.

Pair Corralation between Armada Hflr and Medipharm Labs

Considering the 90-day investment horizon Armada Hflr is expected to generate 5.76 times less return on investment than Medipharm Labs. But when comparing it to its historical volatility, Armada Hflr Pr is 2.8 times less risky than Medipharm Labs. It trades about 0.01 of its potential returns per unit of risk. Medipharm Labs Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4.90  in Medipharm Labs Corp on September 20, 2024 and sell it today you would lose (0.30) from holding Medipharm Labs Corp or give up 6.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Armada Hflr Pr  vs.  Medipharm Labs Corp

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Medipharm Labs Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Armada Hflr and Medipharm Labs

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

The idea behind Armada Hflr Pr and Medipharm Labs 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.