Correlation Between Pharma-Bio Serv and Medicure

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

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

Diversification Opportunities for Pharma-Bio Serv and Medicure

-0.48

Correlation Coefficient

Pharma-Bio Serv  Medicure

Very good diversification

The 3 months correlation between Pharma-Bio and Medicure is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pharma Bio Serv and Medicure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicure and Pharma-Bio Serv 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 Pharma Bio Serv are associated (or correlated) with Medicure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicure has no effect on the direction of Pharma-Bio Serv i.e., Pharma-Bio Serv and Medicure go up and down completely randomly.

Pair Corralation between Pharma-Bio Serv and Medicure

Given the investment horizon of 90 days Pharma Bio Serv is expected to generate 2.69 times more return on investment than Medicure. However, Pharma-Bio Serv is 2.69 times more volatile than Medicure. It trades about 0.04 of its potential returns per unit of risk. Medicure is currently generating about -0.13 per unit of risk. If you would invest  55.00  in Pharma Bio Serv on December 2, 2024 and sell it today you would earn a total of  1.00  from holding Pharma Bio Serv or generate 1.82% return on investment over 90 days.

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

Pharma Bio Serv  vs.  Medicure

Pharma Bio Serv

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pharma Bio Serv are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Pharma-Bio Serv showed solid returns over the last few months and may actually be approaching a breakup point.

Medicure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medicure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pharma-Bio Serv and Medicure

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

The idea behind Pharma Bio Serv and Medicure 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.