Correlation Between MediciNova and Hillevax

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

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

Diversification Opportunities for MediciNova and Hillevax

-0.18

Correlation Coefficient

MediciNova  Hillevax

Good diversification

The 3 months correlation between MediciNova and Hillevax is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding MediciNova and Hillevax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillevax 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 Hillevax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillevax has no effect on the direction of MediciNova i.e., MediciNova and Hillevax go up and down completely randomly.

Pair Corralation between MediciNova and Hillevax

Given the investment horizon of 90 days MediciNova is expected to generate 3.92 times more return on investment than Hillevax. However, MediciNova is 3.92 times more volatile than Hillevax. It trades about 0.09 of its potential returns per unit of risk. Hillevax is currently generating about 0.07 per unit of risk. If you would invest  177.00  in MediciNova on September 4, 2024 and sell it today you would earn a total of  61.00  from holding MediciNova or generate 34.46% return on investment over 90 days.

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

MediciNova  vs.  Hillevax

MediciNova

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MediciNova are ranked lower than 7 (%) 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.

Hillevax

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hillevax are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hillevax may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MediciNova and Hillevax

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

The idea behind MediciNova and Hillevax 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.