Correlation Between Emergent Health and MedMira

Can any of the company-specific risk be diversified away by investing in both Emergent Health and MedMira 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 MedMira 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 MedMira, you can compare the effects of market volatilities on Emergent Health and MedMira 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 MedMira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emergent Health and MedMira.

Diversification Opportunities for Emergent Health and MedMira

-0.11

Correlation Coefficient

Emergent Health  MedMira

Good diversification

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

Pair Corralation between Emergent Health and MedMira

Given the investment horizon of 90 days Emergent Health is expected to generate 9.71 times less return on investment than MedMira. But when comparing it to its historical volatility, Emergent Health Corp is 5.96 times less risky than MedMira. It trades about 0.08 of its potential returns per unit of risk. MedMira is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5.46  in MedMira on December 21, 2024 and sell it today you would lose (4.15) from holding MedMira or give up 76.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Emergent Health Corp  vs.  MedMira

Emergent Health Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emergent Health Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Emergent Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

MedMira

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MedMira are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MedMira reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Emergent Health and MedMira

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

The idea behind Emergent Health Corp and MedMira 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.