Correlation Between DiaMedica Therapeutics and ISpecimen

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

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

Diversification Opportunities for DiaMedica Therapeutics and ISpecimen

-0.42

Correlation Coefficient

DiaMedica Therapeutics  ISpecimen

Very good diversification

The 3 months correlation between DiaMedica and ISpecimen is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding DiaMedica Therapeutics and iSpecimen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSpecimen and DiaMedica Therapeutics 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 DiaMedica Therapeutics are associated (or correlated) with ISpecimen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSpecimen has no effect on the direction of DiaMedica Therapeutics i.e., DiaMedica Therapeutics and ISpecimen go up and down completely randomly.

Pair Corralation between DiaMedica Therapeutics and ISpecimen

Given the investment horizon of 90 days DiaMedica Therapeutics is expected to generate 0.38 times more return on investment than ISpecimen. However, DiaMedica Therapeutics is 2.63 times less risky than ISpecimen. It trades about 0.18 of its potential returns per unit of risk. iSpecimen is currently generating about 0.0 per unit of risk. If you would invest  385.00  in DiaMedica Therapeutics on September 5, 2024 and sell it today you would earn a total of  164.00  from holding DiaMedica Therapeutics or generate 42.6% return on investment over 90 days.

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

DiaMedica Therapeutics  vs.  iSpecimen

DiaMedica Therapeutics

Risk-Adjusted Performance

13 of 100

Good

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

iSpecimen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iSpecimen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ISpecimen is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DiaMedica Therapeutics and ISpecimen

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

The idea behind DiaMedica Therapeutics and iSpecimen 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.