Correlation Between Microbio and Medigen Vaccine

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

By analyzing existing cross correlation between Microbio Co and Medigen Vaccine Biologics, you can compare the effects of market volatilities on Microbio and Medigen Vaccine 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 Microbio with a short position of Medigen Vaccine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microbio and Medigen Vaccine.

Diversification Opportunities for Microbio and Medigen Vaccine

0.89

Correlation Coefficient

Microbio  Medigen Vaccine

Very poor diversification

The 3 months correlation between Microbio and Medigen is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Microbio Co and Medigen Vaccine Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medigen Vaccine Biologics and Microbio 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 Microbio Co are associated (or correlated) with Medigen Vaccine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medigen Vaccine Biologics has no effect on the direction of Microbio i.e., Microbio and Medigen Vaccine go up and down completely randomly.

Pair Corralation between Microbio and Medigen Vaccine

Assuming the 90 days trading horizon Microbio Co is expected to generate 1.34 times more return on investment than Medigen Vaccine. However, Microbio is 1.34 times more volatile than Medigen Vaccine Biologics. It trades about -0.04 of its potential returns per unit of risk. Medigen Vaccine Biologics is currently generating about -0.23 per unit of risk. If you would invest  4,265  in Microbio Co on September 3, 2024 and sell it today you would lose (265.00) from holding Microbio Co or give up 6.21% of portfolio value over 90 days.

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

Microbio Co  vs.  Medigen Vaccine Biologics

Microbio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Microbio Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Microbio is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Medigen Vaccine Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medigen Vaccine Biologics 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.

Pair Trading with Microbio and Medigen Vaccine

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

The idea behind Microbio Co and Medigen Vaccine Biologics 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 Global Correlations module to find global opportunities by holding instruments from different markets.