Correlation Between NorthWest Healthcare and MedMira

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

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

Diversification Opportunities for NorthWest Healthcare and MedMira

0.28

Correlation Coefficient

NorthWest Healthcare  MedMira

Modest diversification

The 3 months correlation between NorthWest and MedMira is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding NorthWest Healthcare Propertie and MedMira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedMira and NorthWest Healthcare 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 NorthWest Healthcare Properties are associated (or correlated) with MedMira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedMira has no effect on the direction of NorthWest Healthcare i.e., NorthWest Healthcare and MedMira go up and down completely randomly.

Pair Corralation between NorthWest Healthcare and MedMira

Assuming the 90 days trading horizon NorthWest Healthcare Properties is expected to under-perform the MedMira. But the stock apears to be less risky and, when comparing its historical volatility, NorthWest Healthcare Properties is 4.1 times less risky than MedMira. The stock trades about 0.0 of its potential returns per unit of risk. The MedMira is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  9.00  in MedMira on September 3, 2024 and sell it today you would lose (0.50) from holding MedMira or give up 5.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

NorthWest Healthcare Propertie  vs.  MedMira

NorthWest Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NorthWest Healthcare Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, NorthWest Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MedMira

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NorthWest Healthcare and MedMira

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

The idea behind NorthWest Healthcare Properties and MedMira 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 Commodity Directory module to find actively traded commodities issued by global exchanges.