Correlation Between Innovent Biologics and MAIA Biotechnology

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

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

Diversification Opportunities for Innovent Biologics and MAIA Biotechnology

-0.01

Correlation Coefficient

Innovent Biologics  MAIA Biotechnology

Good diversification

The 3 months correlation between Innovent and MAIA is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Innovent Biologics and MAIA Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAIA Biotechnology and Innovent Biologics 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 Innovent Biologics are associated (or correlated) with MAIA Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAIA Biotechnology has no effect on the direction of Innovent Biologics i.e., Innovent Biologics and MAIA Biotechnology go up and down completely randomly.

Pair Corralation between Innovent Biologics and MAIA Biotechnology

Assuming the 90 days horizon Innovent Biologics is expected to generate 0.71 times more return on investment than MAIA Biotechnology. However, Innovent Biologics is 1.41 times less risky than MAIA Biotechnology. It trades about 0.08 of its potential returns per unit of risk. MAIA Biotechnology is currently generating about -0.02 per unit of risk. If you would invest  485.00  in Innovent Biologics on December 1, 2024 and sell it today you would earn a total of  75.00  from holding Innovent Biologics or generate 15.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Innovent Biologics  vs.  MAIA Biotechnology

Innovent Biologics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Innovent Biologics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Innovent Biologics reported solid returns over the last few months and may actually be approaching a breakup point.

MAIA Biotechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days MAIA Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Innovent Biologics and MAIA Biotechnology

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

The idea behind Innovent Biologics and MAIA Biotechnology 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.