Correlation Between Medicure and Pure Extracts

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

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

Diversification Opportunities for Medicure and Pure Extracts

0.58

Correlation Coefficient

Medicure  Pure Extracts

Very weak diversification

The 3 months correlation between Medicure and Pure is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Medicure and Pure Extracts Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Extracts Techno and Medicure 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 Medicure are associated (or correlated) with Pure Extracts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Extracts Techno has no effect on the direction of Medicure i.e., Medicure and Pure Extracts go up and down completely randomly.

Pair Corralation between Medicure and Pure Extracts

If you would invest  0.50  in Pure Extracts Technologies on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Pure Extracts Technologies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Medicure  vs.  Pure Extracts Technologies

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 weak 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.

Pure Extracts Techno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pure Extracts Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pure Extracts is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Medicure and Pure Extracts

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

The idea behind Medicure and Pure Extracts Technologies 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.