Correlation Between MediciNova and Agios Pharm

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

By analyzing existing cross correlation between MediciNova and Agios Pharm, you can compare the effects of market volatilities on MediciNova and Agios Pharm 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 Agios Pharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediciNova and Agios Pharm.

Diversification Opportunities for MediciNova and Agios Pharm

-0.04

Correlation Coefficient

MediciNova  Agios Pharm

Good diversification

The 3 months correlation between MediciNova and Agios is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding MediciNova and Agios Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agios Pharm 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 Agios Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agios Pharm has no effect on the direction of MediciNova i.e., MediciNova and Agios Pharm go up and down completely randomly.

Pair Corralation between MediciNova and Agios Pharm

Given the investment horizon of 90 days MediciNova is expected to generate 1.61 times more return on investment than Agios Pharm. However, MediciNova is 1.61 times more volatile than Agios Pharm. It trades about 0.11 of its potential returns per unit of risk. Agios Pharm is currently generating about -0.14 per unit of risk. If you would invest  161.00  in MediciNova on October 6, 2024 and sell it today you would earn a total of  52.00  from holding MediciNova or generate 32.3% return on investment over 90 days.

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

MediciNova  vs.  Agios Pharm

MediciNova

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MediciNova are ranked lower than 3 (%) 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.

Agios Pharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agios Pharm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with MediciNova and Agios Pharm

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

The idea behind MediciNova and Agios Pharm 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.