Correlation Between MedPacto and OLIPASS

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

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

Diversification Opportunities for MedPacto and OLIPASS

0.76

Correlation Coefficient

MedPacto  OLIPASS

Poor diversification

The 3 months correlation between MedPacto and OLIPASS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MedPacto and OLIPASS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OLIPASS and MedPacto 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 MedPacto are associated (or correlated) with OLIPASS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OLIPASS has no effect on the direction of MedPacto i.e., MedPacto and OLIPASS go up and down completely randomly.

Pair Corralation between MedPacto and OLIPASS

Assuming the 90 days trading horizon MedPacto is expected to under-perform the OLIPASS. But the stock apears to be less risky and, when comparing its historical volatility, MedPacto is 3.07 times less risky than OLIPASS. The stock trades about -0.19 of its potential returns per unit of risk. The OLIPASS is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  519,000  in OLIPASS on December 30, 2024 and sell it today you would lose (163,000) from holding OLIPASS or give up 31.41% of portfolio value over 90 days.

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

MedPacto  vs.  OLIPASS

MedPacto

Risk-Adjusted Performance

Very Weak

Over the last 90 days MedPacto has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

OLIPASS

Risk-Adjusted Performance

Very Weak

Over the last 90 days OLIPASS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with MedPacto and OLIPASS

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

The idea behind MedPacto and OLIPASS 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.