Correlation Between Medicenna Therapeutics and Appili Therapeutics

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

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

Diversification Opportunities for Medicenna Therapeutics and Appili Therapeutics

0.14

Correlation Coefficient

Medicenna Therapeutics  Appili Therapeutics

Average diversification

The 3 months correlation between Medicenna and Appili is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Medicenna Therapeutics Corp and Appili Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appili Therapeutics and Medicenna Therapeutics 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 Medicenna Therapeutics Corp are associated (or correlated) with Appili Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appili Therapeutics has no effect on the direction of Medicenna Therapeutics i.e., Medicenna Therapeutics and Appili Therapeutics go up and down completely randomly.

Pair Corralation between Medicenna Therapeutics and Appili Therapeutics

Assuming the 90 days trading horizon Medicenna Therapeutics Corp is expected to under-perform the Appili Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Medicenna Therapeutics Corp is 1.41 times less risky than Appili Therapeutics. The stock trades about -0.29 of its potential returns per unit of risk. The Appili Therapeutics is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Appili Therapeutics on October 9, 2024 and sell it today you would lose (0.50) from holding Appili Therapeutics or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Medicenna Therapeutics Corp  vs.  Appili Therapeutics

Medicenna Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medicenna Therapeutics Corp 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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Appili Therapeutics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Appili Therapeutics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Appili Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medicenna Therapeutics and Appili Therapeutics

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

The idea behind Medicenna Therapeutics Corp and Appili Therapeutics 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.