Correlation Between Amazon CDR and Medicenna TherapeuticsCorp

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

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

Diversification Opportunities for Amazon CDR and Medicenna TherapeuticsCorp

0.76

Correlation Coefficient

Amazon CDR  Medicenna TherapeuticsCorp

Poor diversification

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

Pair Corralation between Amazon CDR and Medicenna TherapeuticsCorp

Assuming the 90 days trading horizon Amazon CDR is expected to generate 65.36 times less return on investment than Medicenna TherapeuticsCorp. But when comparing it to its historical volatility, Amazon CDR is 6.42 times less risky than Medicenna TherapeuticsCorp. It trades about 0.02 of its potential returns per unit of risk. Medicenna TherapeuticsCorp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  150.00  in Medicenna TherapeuticsCorp on February 24, 2024 and sell it today you would earn a total of  84.00  from holding Medicenna TherapeuticsCorp or generate 56.0% return on investment over 90 days.

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

Amazon CDR  vs.  Medicenna TherapeuticsCorp

Amazon CDR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon CDR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Amazon CDR is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Medicenna TherapeuticsCorp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medicenna TherapeuticsCorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Medicenna TherapeuticsCorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amazon CDR and Medicenna TherapeuticsCorp

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

The idea behind Amazon CDR and Medicenna TherapeuticsCorp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.