Correlation Between Universal Vision and Maxigen Biotech

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

By analyzing existing cross correlation between Universal Vision Biotechnology and Maxigen Biotech, you can compare the effects of market volatilities on Universal Vision and Maxigen Biotech 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 Universal Vision with a short position of Maxigen Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Vision and Maxigen Biotech.

Diversification Opportunities for Universal Vision and Maxigen Biotech

-0.49

Correlation Coefficient

Universal Vision  Maxigen Biotech

Very good diversification

The 3 months correlation between Universal and Maxigen is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Universal Vision Biotechnology and Maxigen Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxigen Biotech and Universal Vision 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 Universal Vision Biotechnology are associated (or correlated) with Maxigen Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxigen Biotech has no effect on the direction of Universal Vision i.e., Universal Vision and Maxigen Biotech go up and down completely randomly.

Pair Corralation between Universal Vision and Maxigen Biotech

Assuming the 90 days trading horizon Universal Vision Biotechnology is expected to generate 2.24 times more return on investment than Maxigen Biotech. However, Universal Vision is 2.24 times more volatile than Maxigen Biotech. It trades about 0.01 of its potential returns per unit of risk. Maxigen Biotech is currently generating about 0.01 per unit of risk. If you would invest  26,962  in Universal Vision Biotechnology on September 24, 2024 and sell it today you would lose (6,962) from holding Universal Vision Biotechnology or give up 25.82% of portfolio value over 90 days.

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

Universal Vision Biotechnology  vs.  Maxigen Biotech

Universal Vision Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Vision Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Maxigen Biotech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maxigen Biotech are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Maxigen Biotech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Universal Vision and Maxigen Biotech

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

The idea behind Universal Vision Biotechnology and Maxigen Biotech 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.