Correlation Between Maxigen Biotech and Voltronic Power

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

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

Diversification Opportunities for Maxigen Biotech and Voltronic Power

-0.66

Correlation Coefficient

Maxigen Biotech  Voltronic Power

Excellent diversification

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

Pair Corralation between Maxigen Biotech and Voltronic Power

Assuming the 90 days trading horizon Maxigen Biotech is expected to generate 3.03 times less return on investment than Voltronic Power. But when comparing it to its historical volatility, Maxigen Biotech is 1.18 times less risky than Voltronic Power. It trades about 0.01 of its potential returns per unit of risk. Voltronic Power Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  151,000  in Voltronic Power Technology on October 21, 2024 and sell it today you would earn a total of  36,500  from holding Voltronic Power Technology or generate 24.17% return on investment over 90 days.

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

Maxigen Biotech  vs.  Voltronic Power Technology

Maxigen Biotech

Risk-Adjusted Performance

13 of 100

Good

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

Voltronic Power Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voltronic Power 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.

Pair Trading with Maxigen Biotech and Voltronic Power

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

The idea behind Maxigen Biotech and Voltronic Power Technology 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.