Correlation Between Medigen Biotechnology and WiseChip Semiconductor

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

By analyzing existing cross correlation between Medigen Biotechnology and WiseChip Semiconductor, you can compare the effects of market volatilities on Medigen Biotechnology and WiseChip Semiconductor 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 WiseChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medigen Biotechnology and WiseChip Semiconductor.

Diversification Opportunities for Medigen Biotechnology and WiseChip Semiconductor

0.86

Correlation Coefficient

Medigen Biotechnology  WiseChip Semiconductor

Very poor diversification

The 3 months correlation between Medigen and WiseChip is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Medigen Biotechnology and WiseChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseChip Semiconductor 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 WiseChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseChip Semiconductor has no effect on the direction of Medigen Biotechnology i.e., Medigen Biotechnology and WiseChip Semiconductor go up and down completely randomly.

Pair Corralation between Medigen Biotechnology and WiseChip Semiconductor

Assuming the 90 days trading horizon Medigen Biotechnology is expected to generate 1.15 times more return on investment than WiseChip Semiconductor. However, Medigen Biotechnology is 1.15 times more volatile than WiseChip Semiconductor. It trades about 0.01 of its potential returns per unit of risk. WiseChip Semiconductor is currently generating about -0.03 per unit of risk. If you would invest  3,180  in Medigen Biotechnology on October 3, 2024 and sell it today you would earn a total of  60.00  from holding Medigen Biotechnology or generate 1.89% return on investment over 90 days.

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

Medigen Biotechnology  vs.  WiseChip Semiconductor

Medigen Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medigen Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

WiseChip Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WiseChip Semiconductor 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 February 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 WiseChip Semiconductor

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

The idea behind Medigen Biotechnology and WiseChip Semiconductor 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.