Correlation Between Covalon Technologies and Medicure

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

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

Diversification Opportunities for Covalon Technologies and Medicure

0.08

Correlation Coefficient

Covalon Technologies  Medicure

Significant diversification

The 3 months correlation between Covalon and Medicure is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Covalon Technologies and Medicure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicure and Covalon Technologies 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 Covalon Technologies are associated (or correlated) with Medicure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicure has no effect on the direction of Covalon Technologies i.e., Covalon Technologies and Medicure go up and down completely randomly.

Pair Corralation between Covalon Technologies and Medicure

Assuming the 90 days horizon Covalon Technologies is expected to under-perform the Medicure. But the stock apears to be less risky and, when comparing its historical volatility, Covalon Technologies is 1.27 times less risky than Medicure. The stock trades about -0.13 of its potential returns per unit of risk. The Medicure is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  88.00  in Medicure on December 30, 2024 and sell it today you would lose (9.00) from holding Medicure or give up 10.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Covalon Technologies  vs.  Medicure

Covalon Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Covalon Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Medicure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medicure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Medicure is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Covalon Technologies and Medicure

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

The idea behind Covalon Technologies and Medicure 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.