Correlation Between Maxigen Biotech and Chi Sheng

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

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

Diversification Opportunities for Maxigen Biotech and Chi Sheng

0.78

Correlation Coefficient

Maxigen Biotech  Chi Sheng

Poor diversification

The 3 months correlation between Maxigen and Chi is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Maxigen Biotech and Chi Sheng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Sheng Chemical and Maxigen Biotech 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 Maxigen Biotech are associated (or correlated) with Chi Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Sheng Chemical has no effect on the direction of Maxigen Biotech i.e., Maxigen Biotech and Chi Sheng go up and down completely randomly.

Pair Corralation between Maxigen Biotech and Chi Sheng

Assuming the 90 days trading horizon Maxigen Biotech is expected to generate 1.06 times more return on investment than Chi Sheng. However, Maxigen Biotech is 1.06 times more volatile than Chi Sheng Chemical. It trades about 0.45 of its potential returns per unit of risk. Chi Sheng Chemical is currently generating about 0.14 per unit of risk. If you would invest  4,190  in Maxigen Biotech on September 16, 2024 and sell it today you would earn a total of  600.00  from holding Maxigen Biotech or generate 14.32% return on investment over 90 days.

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

Maxigen Biotech  vs.  Chi Sheng Chemical

Maxigen Biotech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maxigen Biotech are ranked lower than 7 (%) 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.

Chi Sheng Chemical

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chi Sheng Chemical are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chi Sheng is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Maxigen Biotech and Chi Sheng

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

The idea behind Maxigen Biotech and Chi Sheng Chemical 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.