Correlation Between Cyclacel Pharmaceuticals and Medicus Pharma

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

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

Diversification Opportunities for Cyclacel Pharmaceuticals and Medicus Pharma

-0.32

Correlation Coefficient

Cyclacel Pharmaceuticals  Medicus Pharma

Very good diversification

The 3 months correlation between Cyclacel and Medicus is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cyclacel Pharmaceuticals and Medicus Pharma Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicus Pharma and Cyclacel Pharmaceuticals 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 Cyclacel Pharmaceuticals 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 Cyclacel Pharmaceuticals i.e., Cyclacel Pharmaceuticals and Medicus Pharma go up and down completely randomly.

Pair Corralation between Cyclacel Pharmaceuticals and Medicus Pharma

Assuming the 90 days horizon Cyclacel Pharmaceuticals is expected to under-perform the Medicus Pharma. But the preferred stock apears to be less risky and, when comparing its historical volatility, Cyclacel Pharmaceuticals is 6.93 times less risky than Medicus Pharma. The preferred stock trades about -0.09 of its potential returns per unit of risk. The Medicus Pharma Ltd is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  163.00  in Medicus Pharma Ltd on September 16, 2024 and sell it today you would earn a total of  112.00  from holding Medicus Pharma Ltd or generate 68.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.38%
Values	Daily Returns

Cyclacel Pharmaceuticals  vs.  Medicus Pharma Ltd

Cyclacel Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cyclacel Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Preferred Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Medicus Pharma

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medicus Pharma Ltd are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Medicus Pharma showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cyclacel Pharmaceuticals and Medicus Pharma

The main advantage of trading using opposite Cyclacel Pharmaceuticals and Medicus Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cyclacel Pharmaceuticals 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 Cyclacel Pharmaceuticals and Medicus Pharma Ltd 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.