Correlation Between MidCap Financial and ALZECURE PHARMA

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

By analyzing existing cross correlation between MidCap Financial Investment and ALZECURE PHARMA AB, you can compare the effects of market volatilities on MidCap Financial and ALZECURE PHARMA 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 MidCap Financial with a short position of ALZECURE PHARMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and ALZECURE PHARMA.

Diversification Opportunities for MidCap Financial and ALZECURE PHARMA

0.66

Correlation Coefficient

MidCap Financial  ALZECURE PHARMA

Poor diversification

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

Pair Corralation between MidCap Financial and ALZECURE PHARMA

Assuming the 90 days trading horizon MidCap Financial is expected to generate 7.68 times less return on investment than ALZECURE PHARMA. But when comparing it to its historical volatility, MidCap Financial Investment is 11.15 times less risky than ALZECURE PHARMA. It trades about 0.18 of its potential returns per unit of risk. ALZECURE PHARMA AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  19.00  in ALZECURE PHARMA AB on April 22, 2025 and sell it today you would earn a total of  11.00  from holding ALZECURE PHARMA AB or generate 57.89% return on investment over 90 days.

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

MidCap Financial Investment  vs.  ALZECURE PHARMA AB

MidCap Financial Inv

Risk-Adjusted Performance

Good

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

ALZECURE PHARMA AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ALZECURE PHARMA AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ALZECURE PHARMA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MidCap Financial and ALZECURE PHARMA

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

The idea behind MidCap Financial Investment and ALZECURE PHARMA AB 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.