Correlation Between Materials Analysis and Maxigen Biotech

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

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

Diversification Opportunities for Materials Analysis and Maxigen Biotech

-0.65

Correlation Coefficient

Materials Analysis  Maxigen Biotech

Excellent diversification

The 3 months correlation between Materials and Maxigen is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Materials Analysis Technology and Maxigen Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxigen Biotech and Materials Analysis 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 Materials Analysis Technology 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 Materials Analysis i.e., Materials Analysis and Maxigen Biotech go up and down completely randomly.

Pair Corralation between Materials Analysis and Maxigen Biotech

Assuming the 90 days trading horizon Materials Analysis Technology is expected to generate 1.15 times more return on investment than Maxigen Biotech. However, Materials Analysis is 1.15 times more volatile than Maxigen Biotech. It trades about 0.06 of its potential returns per unit of risk. Maxigen Biotech is currently generating about 0.01 per unit of risk. If you would invest  13,904  in Materials Analysis Technology on September 24, 2024 and sell it today you would earn a total of  10,996  from holding Materials Analysis Technology or generate 79.09% return on investment over 90 days.

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

Materials Analysis Technology  vs.  Maxigen Biotech

Materials Analysis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Materials Analysis Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains 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 Materials Analysis and Maxigen Biotech

The main advantage of trading using opposite Materials Analysis and Maxigen Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materials Analysis 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 Materials Analysis Technology 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.