Correlation Between Emergent Health and Medican Enterprises

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

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

Diversification Opportunities for Emergent Health and Medican Enterprises

0.0

Correlation Coefficient

Emergent Health  Medican Enterprises

Pay attention - limited upside

The 3 months correlation between Emergent and Medican is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Health Corp and Medican Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medican Enterprises and Emergent Health 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 Emergent Health Corp are associated (or correlated) with Medican Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medican Enterprises has no effect on the direction of Emergent Health i.e., Emergent Health and Medican Enterprises go up and down completely randomly.

Pair Corralation between Emergent Health and Medican Enterprises

Given the investment horizon of 90 days Emergent Health is expected to generate 25.64 times less return on investment than Medican Enterprises. But when comparing it to its historical volatility, Emergent Health Corp is 9.47 times less risky than Medican Enterprises. It trades about 0.05 of its potential returns per unit of risk. Medican Enterprises is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Medican Enterprises on October 10, 2024 and sell it today you would lose (0.01) from holding Medican Enterprises or give up 100.0% of portfolio value over 90 days.

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

Emergent Health Corp  vs.  Medican Enterprises

Emergent Health Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emergent Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Medican Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medican Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Medican Enterprises is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Emergent Health and Medican Enterprises

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

The idea behind Emergent Health Corp and Medican Enterprises 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.