Correlation Between Medicenna Therapeutics and Sirona Biochem

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

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

Diversification Opportunities for Medicenna Therapeutics and Sirona Biochem

-0.14

Correlation Coefficient

Medicenna Therapeutics  Sirona Biochem

Good diversification

The 3 months correlation between Medicenna and Sirona is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Medicenna Therapeutics Corp and Sirona Biochem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirona Biochem Corp and Medicenna 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 Medicenna Therapeutics Corp are associated (or correlated) with Sirona Biochem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirona Biochem Corp has no effect on the direction of Medicenna Therapeutics i.e., Medicenna Therapeutics and Sirona Biochem go up and down completely randomly.

Pair Corralation between Medicenna Therapeutics and Sirona Biochem

Assuming the 90 days trading horizon Medicenna Therapeutics Corp is expected to under-perform the Sirona Biochem. But the stock apears to be less risky and, when comparing its historical volatility, Medicenna Therapeutics Corp is 1.96 times less risky than Sirona Biochem. The stock trades about -0.1 of its potential returns per unit of risk. The Sirona Biochem Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8.50  in Sirona Biochem Corp on September 4, 2024 and sell it today you would lose (2.00) from holding Sirona Biochem Corp or give up 23.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Medicenna Therapeutics Corp  vs.  Sirona Biochem Corp

Medicenna Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medicenna Therapeutics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sirona Biochem Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sirona Biochem Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sirona Biochem is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Medicenna Therapeutics and Sirona Biochem

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

The idea behind Medicenna Therapeutics Corp and Sirona Biochem Corp 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.