Correlation Between Ever Clear and Maxigen Biotech

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

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

Diversification Opportunities for Ever Clear and Maxigen Biotech

0.4

Correlation Coefficient

Ever Clear  Maxigen Biotech

Very weak diversification

The 3 months correlation between Ever and Maxigen is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ever Clear Environmental Eng and Maxigen Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxigen Biotech and Ever Clear 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 Ever Clear Environmental Eng 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 Ever Clear i.e., Ever Clear and Maxigen Biotech go up and down completely randomly.

Pair Corralation between Ever Clear and Maxigen Biotech

Assuming the 90 days trading horizon Ever Clear is expected to generate 1.64 times less return on investment than Maxigen Biotech. But when comparing it to its historical volatility, Ever Clear Environmental Eng is 1.52 times less risky than Maxigen Biotech. It trades about 0.15 of its potential returns per unit of risk. Maxigen Biotech is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,690  in Maxigen Biotech on October 26, 2024 and sell it today you would earn a total of  340.00  from holding Maxigen Biotech or generate 7.25% return on investment over 90 days.

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

Ever Clear Environmental Eng  vs.  Maxigen Biotech

Ever Clear Environme

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ever Clear Environmental Eng are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Ever Clear is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Maxigen Biotech

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maxigen Biotech are ranked lower than 12 (%) 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 Ever Clear and Maxigen Biotech

The main advantage of trading using opposite Ever Clear and Maxigen Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ever Clear 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 Ever Clear Environmental Eng 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.