Correlation Between Medipharm Labs and Flora Growth

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

Diversification Opportunities for Medipharm Labs and Flora Growth

0.21

Correlation Coefficient

Medipharm Labs  Flora Growth

Modest diversification

The 3 months correlation between Medipharm and Flora is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Medipharm Labs Corp and Flora Growth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flora Growth Corp 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 Flora Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flora Growth Corp has no effect on the direction of Medipharm Labs i.e., Medipharm Labs and Flora Growth go up and down completely randomly.

Pair Corralation between Medipharm Labs and Flora Growth

Assuming the 90 days horizon Medipharm Labs Corp is expected to under-perform the Flora Growth. But the otc stock apears to be less risky and, when comparing its historical volatility, Medipharm Labs Corp is 2.43 times less risky than Flora Growth. The otc stock trades about -0.03 of its potential returns per unit of risk. The Flora Growth Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  142.00  in Flora Growth Corp on September 19, 2024 and sell it today you would lose (37.00) from holding Flora Growth Corp or give up 26.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Medipharm Labs Corp  vs.  Flora Growth Corp

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.

Flora Growth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flora Growth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Flora Growth is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Medipharm Labs and Flora Growth

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

The idea behind Medipharm Labs Corp and Flora Growth 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.