Correlation Between Greenwich Lifesciences and DiaMedica Therapeutics
Can any of the company-specific risk be diversified away by investing in both Greenwich Lifesciences and DiaMedica Therapeutics 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 Greenwich Lifesciences and DiaMedica Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greenwich Lifesciences and DiaMedica Therapeutics, you can compare the effects of market volatilities on Greenwich Lifesciences and DiaMedica Therapeutics 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 Greenwich Lifesciences with a short position of DiaMedica Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greenwich Lifesciences and DiaMedica Therapeutics.
Diversification Opportunities for Greenwich Lifesciences and DiaMedica Therapeutics
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Greenwich and DiaMedica is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Greenwich Lifesciences and DiaMedica Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiaMedica Therapeutics and Greenwich Lifesciences 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 Greenwich Lifesciences are associated (or correlated) with DiaMedica Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiaMedica Therapeutics has no effect on the direction of Greenwich Lifesciences i.e., Greenwich Lifesciences and DiaMedica Therapeutics go up and down completely randomly.
Pair Corralation between Greenwich Lifesciences and DiaMedica Therapeutics
Given the investment horizon of 90 days Greenwich Lifesciences is expected to generate 1.04 times more return on investment than DiaMedica Therapeutics. However, Greenwich Lifesciences is 1.04 times more volatile than DiaMedica Therapeutics. It trades about 0.05 of its potential returns per unit of risk. DiaMedica Therapeutics is currently generating about 0.04 per unit of risk. If you would invest 912.00 in Greenwich Lifesciences on September 12, 2024 and sell it today you would earn a total of 415.00 from holding Greenwich Lifesciences or generate 45.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greenwich Lifesciences vs. DiaMedica Therapeutics
Performance |
| Timeline |
| Greenwich Lifesciences |
| DiaMedica Therapeutics |
Greenwich Lifesciences and DiaMedica Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greenwich Lifesciences and DiaMedica Therapeutics
The main advantage of trading using opposite Greenwich Lifesciences and DiaMedica Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greenwich Lifesciences position performs unexpectedly, DiaMedica Therapeutics 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 DiaMedica Therapeutics will offset losses from the drop in DiaMedica Therapeutics' long position.| Greenwich Lifesciences vs. Equillium | Greenwich Lifesciences vs. DiaMedica Therapeutics | Greenwich Lifesciences vs. Valneva SE ADR | Greenwich Lifesciences vs. Vivani Medical |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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