Correlation Between Item 9 and Medicure

Can any of the company-specific risk be diversified away by investing in both Item 9 and Medicure 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 Item 9 and Medicure into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Item 9 Labs and Medicure, you can compare the effects of market volatilities on Item 9 and Medicure 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 Item 9 with a short position of Medicure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Item 9 and Medicure.

Diversification Opportunities for Item 9 and Medicure

-0.15

Correlation Coefficient

Item 9  Medicure

Good diversification

The 3 months correlation between Item and Medicure is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Item 9 Labs and Medicure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicure and Item 9 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 Item 9 Labs are associated (or correlated) with Medicure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicure has no effect on the direction of Item 9 i.e., Item 9 and Medicure go up and down completely randomly.

Pair Corralation between Item 9 and Medicure

Given the investment horizon of 90 days Item 9 Labs is expected to generate 40.31 times more return on investment than Medicure. However, Item 9 is 40.31 times more volatile than Medicure. It trades about 0.16 of its potential returns per unit of risk. Medicure is currently generating about -0.03 per unit of risk. If you would invest  0.01  in Item 9 Labs on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Item 9 Labs or generate 0.0% return on investment over 90 days.

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

Item 9 Labs  vs.  Medicure

Item 9 Labs

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Item 9 Labs are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Item 9 sustained solid returns over the last few months and may actually be approaching a breakup point.

Medicure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medicure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Item 9 and Medicure

The main advantage of trading using opposite Item 9 and Medicure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Item 9 position performs unexpectedly, Medicure 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 Medicure will offset losses from the drop in Medicure's long position.

The idea behind Item 9 Labs and Medicure 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.