Correlation Between True North and Medibank Private

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

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

Diversification Opportunities for True North and Medibank Private

-0.45

Correlation Coefficient

True North  Medibank Private

Very good diversification

The 3 months correlation between True and Medibank is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding True North Copper and Medibank Private in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medibank Private and True North 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 True North Copper are associated (or correlated) with Medibank Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medibank Private has no effect on the direction of True North i.e., True North and Medibank Private go up and down completely randomly.

Pair Corralation between True North and Medibank Private

Assuming the 90 days trading horizon True North Copper is expected to under-perform the Medibank Private. In addition to that, True North is 8.21 times more volatile than Medibank Private. It trades about -0.13 of its total potential returns per unit of risk. Medibank Private is currently generating about 0.18 per unit of volatility. If you would invest  374.00  in Medibank Private on December 22, 2024 and sell it today you would earn a total of  63.00  from holding Medibank Private or generate 16.84% return on investment over 90 days.

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

True North Copper  vs.  Medibank Private

True North Copper

Risk-Adjusted Performance

Very Weak

Over the last 90 days True North Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Medibank Private

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Medibank Private are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Medibank Private unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with True North and Medibank Private

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

The idea behind True North Copper and Medibank Private 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.