Correlation Between Medipharm Labs and Avicanna

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

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

Diversification Opportunities for Medipharm Labs and Avicanna

-0.4

Correlation Coefficient

Medipharm Labs  Avicanna

Very good diversification

The 3 months correlation between Medipharm and Avicanna is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Medipharm Labs Corp and Avicanna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avicanna and Medipharm Labs 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 Medipharm Labs Corp are associated (or correlated) with Avicanna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avicanna has no effect on the direction of Medipharm Labs i.e., Medipharm Labs and Avicanna go up and down completely randomly.

Pair Corralation between Medipharm Labs and Avicanna

Assuming the 90 days trading horizon Medipharm Labs Corp is expected to generate 0.74 times more return on investment than Avicanna. However, Medipharm Labs Corp is 1.35 times less risky than Avicanna. It trades about 0.03 of its potential returns per unit of risk. Avicanna is currently generating about -0.04 per unit of risk. If you would invest  6.50  in Medipharm Labs Corp on August 31, 2024 and sell it today you would earn a total of  0.00  from holding Medipharm Labs Corp or generate 0.0% return on investment over 90 days.

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

Medipharm Labs Corp  vs.  Avicanna

Medipharm Labs Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Medipharm Labs Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Medipharm Labs may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Avicanna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avicanna has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Medipharm Labs and Avicanna

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

The idea behind Medipharm Labs Corp and Avicanna 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 Anywhere module to track or share privately all of your investments from the convenience of any device.