Correlation Between Aptose Biosciences and MedMira

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

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

Diversification Opportunities for Aptose Biosciences and MedMira

0.24

Correlation Coefficient

Aptose Biosciences  MedMira

Modest diversification

The 3 months correlation between Aptose and MedMira is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Aptose Biosciences and MedMira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedMira and Aptose Biosciences 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 Aptose Biosciences are associated (or correlated) with MedMira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedMira has no effect on the direction of Aptose Biosciences i.e., Aptose Biosciences and MedMira go up and down completely randomly.

Pair Corralation between Aptose Biosciences and MedMira

Assuming the 90 days trading horizon Aptose Biosciences is expected to generate 2.91 times more return on investment than MedMira. However, Aptose Biosciences is 2.91 times more volatile than MedMira. It trades about 0.19 of its potential returns per unit of risk. MedMira is currently generating about 0.12 per unit of risk. If you would invest  26.00  in Aptose Biosciences on September 24, 2024 and sell it today you would earn a total of  16.00  from holding Aptose Biosciences or generate 61.54% return on investment over 90 days.

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

Aptose Biosciences  vs.  MedMira

Aptose Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptose Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Aptose Biosciences may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MedMira

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MedMira are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, MedMira showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aptose Biosciences and MedMira

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

The idea behind Aptose Biosciences and MedMira 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.