Correlation Between Duopharma Biotech and Magni Tech

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

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

Diversification Opportunities for Duopharma Biotech and Magni Tech

0.31

Correlation Coefficient

Duopharma Biotech  Magni Tech

Weak diversification

The 3 months correlation between Duopharma and Magni is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Duopharma Biotech Bhd and Magni Tech Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magni Tech Industries and Duopharma Biotech 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 Duopharma Biotech Bhd are associated (or correlated) with Magni Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magni Tech Industries has no effect on the direction of Duopharma Biotech i.e., Duopharma Biotech and Magni Tech go up and down completely randomly.

Pair Corralation between Duopharma Biotech and Magni Tech

Assuming the 90 days trading horizon Duopharma Biotech Bhd is expected to generate 0.74 times more return on investment than Magni Tech. However, Duopharma Biotech Bhd is 1.36 times less risky than Magni Tech. It trades about -0.03 of its potential returns per unit of risk. Magni Tech Industries is currently generating about -0.12 per unit of risk. If you would invest  126.00  in Duopharma Biotech Bhd on November 28, 2024 and sell it today you would lose (4.00) from holding Duopharma Biotech Bhd or give up 3.17% of portfolio value over 90 days.

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

Duopharma Biotech Bhd  vs.  Magni Tech Industries

Duopharma Biotech Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Duopharma Biotech Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Duopharma Biotech is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Magni Tech Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magni Tech Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Duopharma Biotech and Magni Tech

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

The idea behind Duopharma Biotech Bhd and Magni Tech Industries 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..