Correlation Between Cell Source and MediciNova

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

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

Diversification Opportunities for Cell Source and MediciNova

0.27

Correlation Coefficient

Cell Source  MediciNova

Modest diversification

The 3 months correlation between Cell and MediciNova is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cell Source and MediciNova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediciNova and Cell Source 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 Cell Source are associated (or correlated) with MediciNova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MediciNova has no effect on the direction of Cell Source i.e., Cell Source and MediciNova go up and down completely randomly.

Pair Corralation between Cell Source and MediciNova

Given the investment horizon of 90 days Cell Source is expected to under-perform the MediciNova. In addition to that, Cell Source is 4.35 times more volatile than MediciNova. It trades about -0.04 of its total potential returns per unit of risk. MediciNova is currently generating about -0.16 per unit of volatility. If you would invest  212.00  in MediciNova on December 22, 2024 and sell it today you would lose (59.00) from holding MediciNova or give up 27.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Cell Source  vs.  MediciNova

Cell Source

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cell Source has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

MediciNova

Risk-Adjusted Performance

Very Weak

Over the last 90 days MediciNova has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Cell Source and MediciNova

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

The idea behind Cell Source and MediciNova 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.