Correlation Between MAIA Biotechnology and NeonMind Biosciences

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

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

Diversification Opportunities for MAIA Biotechnology and NeonMind Biosciences

0.06

Correlation Coefficient

MAIA Biotechnology  NeonMind Biosciences

Significant diversification

The 3 months correlation between MAIA and NeonMind is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding MAIA Biotechnology and NeonMind Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeonMind Biosciences and MAIA Biotechnology 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 MAIA Biotechnology are associated (or correlated) with NeonMind Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeonMind Biosciences has no effect on the direction of MAIA Biotechnology i.e., MAIA Biotechnology and NeonMind Biosciences go up and down completely randomly.

Pair Corralation between MAIA Biotechnology and NeonMind Biosciences

Given the investment horizon of 90 days MAIA Biotechnology is expected to generate 554.85 times less return on investment than NeonMind Biosciences. But when comparing it to its historical volatility, MAIA Biotechnology is 22.79 times less risky than NeonMind Biosciences. It trades about 0.01 of its potential returns per unit of risk. NeonMind Biosciences is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.76  in NeonMind Biosciences on October 12, 2024 and sell it today you would earn a total of  49.24  from holding NeonMind Biosciences or generate 6478.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	21.82%
Values	Daily Returns

MAIA Biotechnology  vs.  NeonMind Biosciences

MAIA Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAIA Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, MAIA Biotechnology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NeonMind Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NeonMind Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, NeonMind Biosciences is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MAIA Biotechnology and NeonMind Biosciences

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

The idea behind MAIA Biotechnology and NeonMind Biosciences 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.