Correlation Between MAG Silver and Medicus Pharma

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

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

Diversification Opportunities for MAG Silver and Medicus Pharma

0.28

Correlation Coefficient

MAG Silver  Medicus Pharma

Modest diversification

The 3 months correlation between MAG and Medicus is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Medicus Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicus Pharma and MAG Silver 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 MAG Silver Corp 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 MAG Silver i.e., MAG Silver and Medicus Pharma go up and down completely randomly.

Pair Corralation between MAG Silver and Medicus Pharma

Assuming the 90 days trading horizon MAG Silver Corp is expected to under-perform the Medicus Pharma. But the stock apears to be less risky and, when comparing its historical volatility, MAG Silver Corp is 4.61 times less risky than Medicus Pharma. The stock trades about -0.08 of its potential returns per unit of risk. The Medicus Pharma is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  290.00  in Medicus Pharma on September 17, 2024 and sell it today you would earn a total of  105.00  from holding Medicus Pharma or generate 36.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

MAG Silver Corp  vs.  Medicus Pharma

MAG Silver Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MAG Silver Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, MAG Silver may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Medicus Pharma

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Medicus Pharma are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Medicus Pharma showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAG Silver and Medicus Pharma

The main advantage of trading using opposite MAG Silver and Medicus Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG Silver 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 MAG Silver Corp and Medicus Pharma 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.