Correlation Between Medicus Pharma and Worthington Steel

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

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

Diversification Opportunities for Medicus Pharma and Worthington Steel

0.19

Correlation Coefficient

Medicus Pharma  Worthington Steel

Average diversification

The 3 months correlation between Medicus and Worthington is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Medicus Pharma Ltd and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel and Medicus Pharma 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 Medicus Pharma Ltd are associated (or correlated) with Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of Medicus Pharma i.e., Medicus Pharma and Worthington Steel go up and down completely randomly.

Pair Corralation between Medicus Pharma and Worthington Steel

Given the investment horizon of 90 days Medicus Pharma Ltd is expected to generate 1.6 times more return on investment than Worthington Steel. However, Medicus Pharma is 1.6 times more volatile than Worthington Steel. It trades about 0.08 of its potential returns per unit of risk. Worthington Steel is currently generating about -0.44 per unit of risk. If you would invest  280.00  in Medicus Pharma Ltd on October 10, 2024 and sell it today you would earn a total of  19.00  from holding Medicus Pharma Ltd or generate 6.79% return on investment over 90 days.

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

Medicus Pharma Ltd  vs.  Worthington Steel

Medicus Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medicus Pharma Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Worthington Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worthington Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Worthington Steel is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Medicus Pharma and Worthington Steel

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

The idea behind Medicus Pharma Ltd and Worthington Steel 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.