Correlation Between Medipharm Labs and Acreage Holdings

Can any of the company-specific risk be diversified away by investing in both Medipharm Labs and Acreage Holdings 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 Acreage Holdings 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 Acreage Holdings, you can compare the effects of market volatilities on Medipharm Labs and Acreage Holdings 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 Acreage Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medipharm Labs and Acreage Holdings.

Diversification Opportunities for Medipharm Labs and Acreage Holdings

0.31

Correlation Coefficient

Medipharm Labs  Acreage Holdings

Weak diversification

The 3 months correlation between Medipharm and Acreage is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Medipharm Labs Corp and Acreage Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acreage Holdings 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 Acreage Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acreage Holdings has no effect on the direction of Medipharm Labs i.e., Medipharm Labs and Acreage Holdings go up and down completely randomly.

Pair Corralation between Medipharm Labs and Acreage Holdings

Assuming the 90 days horizon Medipharm Labs Corp is expected to under-perform the Acreage Holdings. But the otc stock apears to be less risky and, when comparing its historical volatility, Medipharm Labs Corp is 4.04 times less risky than Acreage Holdings. The otc stock trades about -0.03 of its potential returns per unit of risk. The Acreage Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Acreage Holdings on September 19, 2024 and sell it today you would lose (8.00) from holding Acreage Holdings or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.06%
Values	Daily Returns

Medipharm Labs Corp  vs.  Acreage Holdings

Medipharm Labs Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Acreage Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acreage Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile fundamental indicators, Acreage Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Medipharm Labs and Acreage Holdings

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

The idea behind Medipharm Labs Corp and Acreage Holdings 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.