Correlation Between MediciNova and AC Immune

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

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

Diversification Opportunities for MediciNova and AC Immune

0.56

Correlation Coefficient

MediciNova  AC Immune

Very weak diversification

The 3 months correlation between MediciNova and ACIU is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding MediciNova and AC Immune in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AC Immune and MediciNova 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 MediciNova are associated (or correlated) with AC Immune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AC Immune has no effect on the direction of MediciNova i.e., MediciNova and AC Immune go up and down completely randomly.

Pair Corralation between MediciNova and AC Immune

Given the investment horizon of 90 days MediciNova is expected to generate 2.81 times less return on investment than AC Immune. But when comparing it to its historical volatility, MediciNova is 1.33 times less risky than AC Immune. It trades about 0.01 of its potential returns per unit of risk. AC Immune is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  239.00  in AC Immune on November 20, 2024 and sell it today you would earn a total of  35.00  from holding AC Immune or generate 14.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

MediciNova  vs.  AC Immune

MediciNova

Risk-Adjusted Performance

Weak

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

AC Immune

Risk-Adjusted Performance

Very Weak

Over the last 90 days AC Immune 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 forward indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with MediciNova and AC Immune

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

The idea behind MediciNova and AC Immune 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.