Correlation Between Medmen Enterprises and Athenex

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

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

Diversification Opportunities for Medmen Enterprises and Athenex

-0.88

Correlation Coefficient

Medmen Enterprises  Athenex

Pay attention - limited upside

The 3 months correlation between Medmen and Athenex is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Medmen Enterprises Class and Athenex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athenex and Medmen Enterprises 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 Medmen Enterprises Class are associated (or correlated) with Athenex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athenex has no effect on the direction of Medmen Enterprises i.e., Medmen Enterprises and Athenex go up and down completely randomly.

Pair Corralation between Medmen Enterprises and Athenex

Assuming the 90 days horizon Medmen Enterprises Class is expected to generate 3.39 times more return on investment than Athenex. However, Medmen Enterprises is 3.39 times more volatile than Athenex. It trades about 0.04 of its potential returns per unit of risk. Athenex is currently generating about -0.13 per unit of risk. If you would invest  2.60  in Medmen Enterprises Class on September 5, 2024 and sell it today you would lose (2.59) from holding Medmen Enterprises Class or give up 99.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	37.84%
Values	Daily Returns

Medmen Enterprises Class  vs.  Athenex

Medmen Enterprises Class

Risk-Adjusted Performance

0 of 100

Very Weak

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

Athenex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Athenex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Athenex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Medmen Enterprises and Athenex

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

The idea behind Medmen Enterprises Class and Athenex 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.