Correlation Between MedMira and Therma Bright
Can any of the company-specific risk be diversified away by investing in both MedMira and Therma Bright 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 MedMira and Therma Bright into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MedMira and Therma Bright, you can compare the effects of market volatilities on MedMira and Therma Bright 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 MedMira with a short position of Therma Bright. Check out your portfolio center. Please also check ongoing floating volatility patterns of MedMira and Therma Bright.
Diversification Opportunities for MedMira and Therma Bright
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MedMira and Therma is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding MedMira and Therma Bright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Therma Bright and MedMira 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 MedMira are associated (or correlated) with Therma Bright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Therma Bright has no effect on the direction of MedMira i.e., MedMira and Therma Bright go up and down completely randomly.
Pair Corralation between MedMira and Therma Bright
Assuming the 90 days horizon MedMira is expected to generate 1.4 times less return on investment than Therma Bright. But when comparing it to its historical volatility, MedMira is 2.59 times less risky than Therma Bright. It trades about 0.44 of its potential returns per unit of risk. Therma Bright is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Therma Bright on October 24, 2024 and sell it today you would earn a total of 2.00 from holding Therma Bright or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MedMira vs. Therma Bright
Performance |
| Timeline |
| MedMira |
| Therma Bright |
MedMira and Therma Bright Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MedMira and Therma Bright
The main advantage of trading using opposite MedMira and Therma Bright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MedMira position performs unexpectedly, Therma Bright 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 Therma Bright will offset losses from the drop in Therma Bright's long position.| MedMira vs. Marimaca Copper Corp | MedMira vs. Forsys Metals Corp | MedMira vs. T2 Metals Corp | MedMira vs. MAG Silver Corp |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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