Correlation Between Cann American and Medipharm Labs
Can any of the company-specific risk be diversified away by investing in both Cann American and Medipharm Labs 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 Cann American and Medipharm Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cann American Corp and Medipharm Labs Corp, you can compare the effects of market volatilities on Cann American and Medipharm Labs 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 Cann American with a short position of Medipharm Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cann American and Medipharm Labs.
Diversification Opportunities for Cann American and Medipharm Labs
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cann and Medipharm is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cann American Corp and Medipharm Labs Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medipharm Labs Corp and Cann American 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 Cann American Corp are associated (or correlated) with Medipharm Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medipharm Labs Corp has no effect on the direction of Cann American i.e., Cann American and Medipharm Labs go up and down completely randomly.
Pair Corralation between Cann American and Medipharm Labs
Given the investment horizon of 90 days Cann American Corp is expected to generate 5.16 times more return on investment than Medipharm Labs. However, Cann American is 5.16 times more volatile than Medipharm Labs Corp. It trades about 0.1 of its potential returns per unit of risk. Medipharm Labs Corp is currently generating about -0.01 per unit of risk. If you would invest 0.20 in Cann American Corp on September 1, 2024 and sell it today you would earn a total of 0.12 from holding Cann American Corp or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Cann American Corp vs. Medipharm Labs Corp
Performance |
| Timeline |
| Cann American Corp |
| Medipharm Labs Corp |
Cann American and Medipharm Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cann American and Medipharm Labs
The main advantage of trading using opposite Cann American and Medipharm Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cann American position performs unexpectedly, Medipharm Labs 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 Medipharm Labs will offset losses from the drop in Medipharm Labs' long position.| Cann American vs. XCPCNL Business Services | Cann American vs. Golden Developing Solutions | Cann American vs. Indo Global Exchange | Cann American vs. Cgrowth Capital |
| Medipharm Labs vs. Holloman Energy Corp | Medipharm Labs vs. cbdMD Inc | Medipharm Labs vs. Evolus Inc | Medipharm Labs vs. CV Sciences |
Check out your portfolio center.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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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