Correlation Between Intech Biopharm and Maxigen Biotech

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

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

Diversification Opportunities for Intech Biopharm and Maxigen Biotech

-0.69

Correlation Coefficient

Intech Biopharm  Maxigen Biotech

Excellent diversification

The 3 months correlation between Intech and Maxigen is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Intech Biopharm and Maxigen Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxigen Biotech and Intech Biopharm 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 Intech Biopharm are associated (or correlated) with Maxigen Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxigen Biotech has no effect on the direction of Intech Biopharm i.e., Intech Biopharm and Maxigen Biotech go up and down completely randomly.

Pair Corralation between Intech Biopharm and Maxigen Biotech

Assuming the 90 days trading horizon Intech Biopharm is expected to under-perform the Maxigen Biotech. But the stock apears to be less risky and, when comparing its historical volatility, Intech Biopharm is 1.09 times less risky than Maxigen Biotech. The stock trades about -0.14 of its potential returns per unit of risk. The Maxigen Biotech is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  4,285  in Maxigen Biotech on October 11, 2024 and sell it today you would earn a total of  945.00  from holding Maxigen Biotech or generate 22.05% return on investment over 90 days.

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

Intech Biopharm  vs.  Maxigen Biotech

Intech Biopharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intech Biopharm 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.

Maxigen Biotech

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Maxigen Biotech are ranked lower than 18 (%) 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.

Pair Trading with Intech Biopharm and Maxigen Biotech

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

The idea behind Intech Biopharm and Maxigen Biotech 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.