Correlation Between Auxly Cannabis and Medipharm Labs
Can any of the company-specific risk be diversified away by investing in both Auxly Cannabis 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 Auxly Cannabis and Medipharm Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auxly Cannabis Group and Medipharm Labs Corp, you can compare the effects of market volatilities on Auxly Cannabis 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 Auxly Cannabis with a short position of Medipharm Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auxly Cannabis and Medipharm Labs.
Diversification Opportunities for Auxly Cannabis and Medipharm Labs
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Auxly and Medipharm is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Auxly Cannabis Group 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 Auxly Cannabis 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 Auxly Cannabis Group 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 Auxly Cannabis i.e., Auxly Cannabis and Medipharm Labs go up and down completely randomly.
Pair Corralation between Auxly Cannabis and Medipharm Labs
Assuming the 90 days trading horizon Auxly Cannabis Group is expected to generate 1.63 times more return on investment than Medipharm Labs. However, Auxly Cannabis is 1.63 times more volatile than Medipharm Labs Corp. It trades about 0.01 of its potential returns per unit of risk. Medipharm Labs Corp is currently generating about -0.09 per unit of risk. If you would invest 4.00 in Auxly Cannabis Group on August 30, 2024 and sell it today you would lose (0.25) from holding Auxly Cannabis Group or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auxly Cannabis Group vs. Medipharm Labs Corp
Performance |
| Timeline |
| Auxly Cannabis Group |
| Medipharm Labs Corp |
Auxly Cannabis and Medipharm Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auxly Cannabis and Medipharm Labs
The main advantage of trading using opposite Auxly Cannabis and Medipharm Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auxly Cannabis 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.| Auxly Cannabis vs. OrganiGram Holdings | Auxly Cannabis vs. Lifeist Wellness | Auxly Cannabis vs. Medipharm Labs Corp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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