Correlation Between Medipharm Labs and Lowell Farms

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

Diversification Opportunities for Medipharm Labs and Lowell Farms

-0.22

Correlation Coefficient

Medipharm Labs  Lowell Farms

Very good diversification

The 3 months correlation between Medipharm and Lowell is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Medipharm Labs Corp and Lowell Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowell Farms 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 Lowell Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowell Farms has no effect on the direction of Medipharm Labs i.e., Medipharm Labs and Lowell Farms go up and down completely randomly.

Pair Corralation between Medipharm Labs and Lowell Farms

Assuming the 90 days horizon Medipharm Labs is expected to generate 1.77 times less return on investment than Lowell Farms. But when comparing it to its historical volatility, Medipharm Labs Corp is 2.69 times less risky than Lowell Farms. It trades about 0.15 of its potential returns per unit of risk. Lowell Farms is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Lowell Farms on December 30, 2024 and sell it today you would earn a total of  0.30  from holding Lowell Farms or generate 30.0% return on investment over 90 days.

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

Medipharm Labs Corp  vs.  Lowell Farms

Medipharm Labs Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Medipharm Labs Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Medipharm Labs reported solid returns over the last few months and may actually be approaching a breakup point.

Lowell Farms

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lowell Farms are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Lowell Farms reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medipharm Labs and Lowell Farms

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

The idea behind Medipharm Labs Corp and Lowell Farms 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.