Correlation Between Medipharm Labs and Tilray

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

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

Diversification Opportunities for Medipharm Labs and Tilray

0.17

Correlation Coefficient

Medipharm Labs  Tilray

Average diversification

The 3 months correlation between Medipharm and Tilray is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Medipharm Labs Corp and Tilray Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tilray Inc and Medipharm Labs 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 Medipharm Labs Corp are associated (or correlated) with Tilray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tilray Inc has no effect on the direction of Medipharm Labs i.e., Medipharm Labs and Tilray go up and down completely randomly.

Pair Corralation between Medipharm Labs and Tilray

Assuming the 90 days trading horizon Medipharm Labs Corp is expected to generate 1.97 times more return on investment than Tilray. However, Medipharm Labs is 1.97 times more volatile than Tilray Inc. It trades about 0.03 of its potential returns per unit of risk. Tilray Inc is currently generating about -0.19 per unit of risk. If you would invest  6.50  in Medipharm Labs Corp on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Medipharm Labs Corp or generate 0.0% return on investment over 90 days.

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

Medipharm Labs Corp  vs.  Tilray Inc

Medipharm Labs Corp

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Medipharm Labs Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Medipharm Labs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tilray Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tilray Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Medipharm Labs and Tilray

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

The idea behind Medipharm Labs Corp and Tilray Inc 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.