Correlation Between Amazon CDR and Medicenna Therapeutics

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

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

Diversification Opportunities for Amazon CDR and Medicenna Therapeutics

-0.54

Correlation Coefficient

Amazon CDR  Medicenna Therapeutics

Excellent diversification

The 3 months correlation between Amazon and Medicenna is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Medicenna Therapeutics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicenna Therapeutics and Amazon CDR 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 Amazon CDR are associated (or correlated) with Medicenna Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicenna Therapeutics has no effect on the direction of Amazon CDR i.e., Amazon CDR and Medicenna Therapeutics go up and down completely randomly.

Pair Corralation between Amazon CDR and Medicenna Therapeutics

Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.35 times more return on investment than Medicenna Therapeutics. However, Amazon CDR is 2.89 times less risky than Medicenna Therapeutics. It trades about 0.18 of its potential returns per unit of risk. Medicenna Therapeutics Corp is currently generating about -0.1 per unit of risk. If you would invest  2,072  in Amazon CDR on September 4, 2024 and sell it today you would earn a total of  436.00  from holding Amazon CDR or generate 21.04% return on investment over 90 days.

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

Amazon CDR  vs.  Medicenna Therapeutics Corp

Amazon CDR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon CDR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Amazon CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Medicenna Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medicenna Therapeutics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Amazon CDR and Medicenna Therapeutics

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

The idea behind Amazon CDR and Medicenna Therapeutics 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.