Correlation Between Tilray and Medipharm Labs

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

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

Diversification Opportunities for Tilray and Medipharm Labs

-0.66

Correlation Coefficient

Tilray  Medipharm Labs

Excellent diversification

The 3 months correlation between Tilray and Medipharm is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Tilray Inc and Medipharm Labs Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medipharm Labs Corp and Tilray 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 Tilray Inc are associated (or correlated) with Medipharm Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medipharm Labs Corp has no effect on the direction of Tilray i.e., Tilray and Medipharm Labs go up and down completely randomly.

Pair Corralation between Tilray and Medipharm Labs

Assuming the 90 days trading horizon Tilray Inc is expected to under-perform the Medipharm Labs. But the stock apears to be less risky and, when comparing its historical volatility, Tilray Inc is 1.41 times less risky than Medipharm Labs. The stock trades about -0.23 of its potential returns per unit of risk. The Medipharm Labs Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Medipharm Labs Corp on December 30, 2024 and sell it today you would earn a total of  4.00  from holding Medipharm Labs Corp or generate 66.67% return on investment over 90 days.

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

Tilray Inc  vs.  Medipharm Labs Corp

Tilray Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tilray Inc 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.

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. In spite of very unfluctuating basic indicators, Medipharm Labs displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tilray and Medipharm Labs

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

The idea behind Tilray Inc and Medipharm Labs Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.