Correlation Between MediciNova and Cingulate Warrants

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

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

Diversification Opportunities for MediciNova and Cingulate Warrants

-0.16

Correlation Coefficient

MediciNova  Cingulate Warrants

Good diversification

The 3 months correlation between MediciNova and Cingulate is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding MediciNova and Cingulate Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate Warrants 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 Cingulate Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cingulate Warrants has no effect on the direction of MediciNova i.e., MediciNova and Cingulate Warrants go up and down completely randomly.

Pair Corralation between MediciNova and Cingulate Warrants

Given the investment horizon of 90 days MediciNova is expected to generate 153.31 times less return on investment than Cingulate Warrants. But when comparing it to its historical volatility, MediciNova is 27.43 times less risky than Cingulate Warrants. It trades about 0.03 of its potential returns per unit of risk. Cingulate Warrants is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Cingulate Warrants on October 6, 2024 and sell it today you would lose (3.93) from holding Cingulate Warrants or give up 39.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.4%
Values	Daily Returns

MediciNova  vs.  Cingulate Warrants

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.

Cingulate Warrants

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cingulate Warrants are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Cingulate Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MediciNova and Cingulate Warrants

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

The idea behind MediciNova and Cingulate Warrants 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.