Correlation Between Medigen Biotechnology and Advanced Lithium

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

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

Diversification Opportunities for Medigen Biotechnology and Advanced Lithium

-0.41

Correlation Coefficient

Medigen Biotechnology  Advanced Lithium

Very good diversification

The 3 months correlation between Medigen and Advanced is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Medigen Biotechnology and Advanced Lithium Electrochemis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Lithium Ele and Medigen Biotechnology 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 Medigen Biotechnology are associated (or correlated) with Advanced Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Lithium Ele has no effect on the direction of Medigen Biotechnology i.e., Medigen Biotechnology and Advanced Lithium go up and down completely randomly.

Pair Corralation between Medigen Biotechnology and Advanced Lithium

Assuming the 90 days trading horizon Medigen Biotechnology is expected to generate 0.87 times more return on investment than Advanced Lithium. However, Medigen Biotechnology is 1.14 times less risky than Advanced Lithium. It trades about 0.11 of its potential returns per unit of risk. Advanced Lithium Electrochemistry is currently generating about -0.21 per unit of risk. If you would invest  3,170  in Medigen Biotechnology on December 24, 2024 and sell it today you would earn a total of  380.00  from holding Medigen Biotechnology or generate 11.99% return on investment over 90 days.

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

Medigen Biotechnology  vs.  Advanced Lithium Electrochemis

Medigen Biotechnology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medigen Biotechnology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Medigen Biotechnology showed solid returns over the last few months and may actually be approaching a breakup point.

Advanced Lithium Ele

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Lithium Electrochemistry 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Medigen Biotechnology and Advanced Lithium

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

The idea behind Medigen Biotechnology and Advanced Lithium Electrochemistry 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.