Correlation Between DV Biomed and Magnate Technology

Can any of the company-specific risk be diversified away by investing in both DV Biomed and Magnate Technology 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 DV Biomed and Magnate Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DV Biomed Co and Magnate Technology Co, you can compare the effects of market volatilities on DV Biomed and Magnate Technology 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 DV Biomed with a short position of Magnate Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of DV Biomed and Magnate Technology.

Diversification Opportunities for DV Biomed and Magnate Technology

-0.48

Correlation Coefficient

DV Biomed  Magnate Technology

Very good diversification

The 3 months correlation between 6539 and Magnate is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding DV Biomed Co and Magnate Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnate Technology and DV Biomed 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 DV Biomed Co are associated (or correlated) with Magnate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnate Technology has no effect on the direction of DV Biomed i.e., DV Biomed and Magnate Technology go up and down completely randomly.

Pair Corralation between DV Biomed and Magnate Technology

Assuming the 90 days trading horizon DV Biomed Co is expected to under-perform the Magnate Technology. In addition to that, DV Biomed is 1.19 times more volatile than Magnate Technology Co. It trades about -0.19 of its total potential returns per unit of risk. Magnate Technology Co is currently generating about 0.05 per unit of volatility. If you would invest  3,425  in Magnate Technology Co on October 9, 2024 and sell it today you would earn a total of  60.00  from holding Magnate Technology Co or generate 1.75% return on investment over 90 days.

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

DV Biomed Co  vs.  Magnate Technology Co

DV Biomed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DV Biomed Co 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.

Magnate Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magnate Technology Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Magnate Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DV Biomed and Magnate Technology

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

The idea behind DV Biomed Co and Magnate Technology Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.