Correlation Between Daxin Materials and Medigen Biotechnology

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

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

Diversification Opportunities for Daxin Materials and Medigen Biotechnology

0.02

Correlation Coefficient

Daxin Materials  Medigen Biotechnology

Significant diversification

The 3 months correlation between Daxin and Medigen is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Daxin Materials Corp and Medigen Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medigen Biotechnology and Daxin Materials 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 Daxin Materials Corp are associated (or correlated) with Medigen Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medigen Biotechnology has no effect on the direction of Daxin Materials i.e., Daxin Materials and Medigen Biotechnology go up and down completely randomly.

Pair Corralation between Daxin Materials and Medigen Biotechnology

Assuming the 90 days trading horizon Daxin Materials is expected to generate 238.33 times less return on investment than Medigen Biotechnology. In addition to that, Daxin Materials is 1.46 times more volatile than Medigen Biotechnology. It trades about 0.0 of its total potential returns per unit of risk. Medigen Biotechnology is currently generating about 0.1 per unit of volatility. If you would invest  3,180  in Medigen Biotechnology on December 23, 2024 and sell it today you would earn a total of  370.00  from holding Medigen Biotechnology or generate 11.64% return on investment over 90 days.

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

Daxin Materials Corp  vs.  Medigen Biotechnology

Daxin Materials Corp

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Daxin Materials and Medigen Biotechnology

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

The idea behind Daxin Materials Corp and Medigen Biotechnology 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.