Correlation Between MedMira and Therma Bright

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

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

Diversification Opportunities for MedMira and Therma Bright

0.76

Correlation Coefficient

MedMira  Therma Bright

Poor diversification

The 3 months correlation between MedMira and Therma is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MedMira and Therma Bright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Therma Bright and MedMira 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 MedMira are associated (or correlated) with Therma Bright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Therma Bright has no effect on the direction of MedMira i.e., MedMira and Therma Bright go up and down completely randomly.

Pair Corralation between MedMira and Therma Bright

Assuming the 90 days horizon MedMira is expected to under-perform the Therma Bright. But the stock apears to be less risky and, when comparing its historical volatility, MedMira is 2.16 times less risky than Therma Bright. The stock trades about -0.02 of its potential returns per unit of risk. The Therma Bright is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Therma Bright on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Therma Bright or generate 0.0% return on investment over 90 days.

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

MedMira  vs.  Therma Bright

MedMira

Risk-Adjusted Performance

Very Weak

Over the last 90 days MedMira has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Therma Bright

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Therma Bright are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Therma Bright showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MedMira and Therma Bright

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

The idea behind MedMira and Therma Bright 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..