Correlation Between MedinCell and Vir Biotechnology

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

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

Diversification Opportunities for MedinCell and Vir Biotechnology

0.0

Correlation Coefficient

MedinCell  Vir Biotechnology

Pay attention - limited upside

The 3 months correlation between MedinCell and Vir is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MedinCell SA and Vir Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vir Biotechnology and MedinCell 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 MedinCell SA are associated (or correlated) with Vir Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vir Biotechnology has no effect on the direction of MedinCell i.e., MedinCell and Vir Biotechnology go up and down completely randomly.

Pair Corralation between MedinCell and Vir Biotechnology

Assuming the 90 days horizon MedinCell SA is expected to generate 0.42 times more return on investment than Vir Biotechnology. However, MedinCell SA is 2.39 times less risky than Vir Biotechnology. It trades about -0.03 of its potential returns per unit of risk. Vir Biotechnology is currently generating about -0.04 per unit of risk. If you would invest  970.00  in MedinCell SA on September 26, 2024 and sell it today you would lose (272.00) from holding MedinCell SA or give up 28.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

MedinCell SA  vs.  Vir Biotechnology

MedinCell SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vir Biotechnology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vir Biotechnology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, Vir Biotechnology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MedinCell and Vir Biotechnology

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

The idea behind MedinCell SA and Vir 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.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.