Correlation Between Medicenna Therapeutics and Arch Biopartners

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

Diversification Opportunities for Medicenna Therapeutics and Arch Biopartners

0.38

Correlation Coefficient

Medicenna Therapeutics  Arch Biopartners

Weak diversification

The 3 months correlation between Medicenna and Arch is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Medicenna Therapeutics Corp and Arch Biopartners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arch Biopartners 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 Arch Biopartners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arch Biopartners has no effect on the direction of Medicenna Therapeutics i.e., Medicenna Therapeutics and Arch Biopartners go up and down completely randomly.

Pair Corralation between Medicenna Therapeutics and Arch Biopartners

Assuming the 90 days trading horizon Medicenna Therapeutics Corp is expected to under-perform the Arch Biopartners. In addition to that, Medicenna Therapeutics is 1.83 times more volatile than Arch Biopartners. It trades about -0.22 of its total potential returns per unit of risk. Arch Biopartners is currently generating about -0.03 per unit of volatility. If you would invest  184.00  in Arch Biopartners on December 30, 2024 and sell it today you would lose (9.00) from holding Arch Biopartners or give up 4.89% of portfolio value over 90 days.

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

Medicenna Therapeutics Corp  vs.  Arch Biopartners

Medicenna Therapeutics

Risk-Adjusted Performance

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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Arch Biopartners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arch Biopartners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Arch Biopartners is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Medicenna Therapeutics and Arch Biopartners

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

The idea behind Medicenna Therapeutics Corp and Arch Biopartners 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.