Correlation Between Janux Therapeutics and MediciNova

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

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

Diversification Opportunities for Janux Therapeutics and MediciNova

-0.32

Correlation Coefficient

Janux Therapeutics  MediciNova

Very good diversification

The 3 months correlation between Janux and MediciNova is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Janux Therapeutics and MediciNova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediciNova and Janux Therapeutics 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 Janux Therapeutics 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 Janux Therapeutics i.e., Janux Therapeutics and MediciNova go up and down completely randomly.

Pair Corralation between Janux Therapeutics and MediciNova

Given the investment horizon of 90 days Janux Therapeutics is expected to generate 10.42 times less return on investment than MediciNova. But when comparing it to its historical volatility, Janux Therapeutics is 2.53 times less risky than MediciNova. It trades about 0.02 of its potential returns per unit of risk. MediciNova is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  165.00  in MediciNova on August 31, 2024 and sell it today you would earn a total of  36.00  from holding MediciNova or generate 21.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Janux Therapeutics  vs.  MediciNova

Janux Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Janux Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Janux Therapeutics is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

MediciNova

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MediciNova are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, MediciNova showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Janux Therapeutics and MediciNova

The main advantage of trading using opposite Janux Therapeutics and MediciNova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Janux Therapeutics 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 Janux Therapeutics 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.