Correlation Between Apple and Medicus Pharma

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

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

Diversification Opportunities for Apple and Medicus Pharma

-0.4

Correlation Coefficient

Apple  Medicus Pharma

Very good diversification

The 3 months correlation between Apple and Medicus is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Medicus Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicus Pharma and Apple 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 Apple Inc CDR are associated (or correlated) with Medicus Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicus Pharma has no effect on the direction of Apple i.e., Apple and Medicus Pharma go up and down completely randomly.

Pair Corralation between Apple and Medicus Pharma

Assuming the 90 days trading horizon Apple Inc CDR is expected to under-perform the Medicus Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc CDR is 11.9 times less risky than Medicus Pharma. The stock trades about -0.04 of its potential returns per unit of risk. The Medicus Pharma is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  684.00  in Medicus Pharma on October 20, 2024 and sell it today you would lose (285.00) from holding Medicus Pharma or give up 41.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc CDR  vs.  Medicus Pharma

Apple Inc CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Apple is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Medicus Pharma

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Medicus Pharma are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Medicus Pharma showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Medicus Pharma

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

The idea behind Apple Inc CDR and Medicus Pharma 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.