Correlation Between MEDIPAL HOLDINGS and AmerisourceBergen

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

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

Diversification Opportunities for MEDIPAL HOLDINGS and AmerisourceBergen

0.11

Correlation Coefficient

MEDIPAL HOLDINGS  AmerisourceBergen

Average diversification

The 3 months correlation between MEDIPAL and AmerisourceBergen is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding MEDIPAL HOLDINGS P and AmerisourceBergen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmerisourceBergen and MEDIPAL HOLDINGS 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 MEDIPAL HOLDINGS P are associated (or correlated) with AmerisourceBergen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmerisourceBergen has no effect on the direction of MEDIPAL HOLDINGS i.e., MEDIPAL HOLDINGS and AmerisourceBergen go up and down completely randomly.

Pair Corralation between MEDIPAL HOLDINGS and AmerisourceBergen

Assuming the 90 days horizon MEDIPAL HOLDINGS P is expected to generate 0.96 times more return on investment than AmerisourceBergen. However, MEDIPAL HOLDINGS P is 1.05 times less risky than AmerisourceBergen. It trades about -0.16 of its potential returns per unit of risk. AmerisourceBergen is currently generating about -0.22 per unit of risk. If you would invest  1,490  in MEDIPAL HOLDINGS P on October 10, 2024 and sell it today you would lose (50.00) from holding MEDIPAL HOLDINGS P or give up 3.36% of portfolio value over 90 days.

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

MEDIPAL HOLDINGS P  vs.  AmerisourceBergen

MEDIPAL HOLDINGS P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEDIPAL HOLDINGS P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AmerisourceBergen

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AmerisourceBergen are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AmerisourceBergen may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MEDIPAL HOLDINGS and AmerisourceBergen

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

The idea behind MEDIPAL HOLDINGS P and AmerisourceBergen 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .