Correlation Between MediciNova and Marker Therapeutics

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

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

Diversification Opportunities for MediciNova and Marker Therapeutics

-0.5

Correlation Coefficient

MediciNova  Marker Therapeutics

Very good diversification

The 3 months correlation between MediciNova and Marker is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding MediciNova and Marker Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marker Therapeutics 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 Marker Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marker Therapeutics has no effect on the direction of MediciNova i.e., MediciNova and Marker Therapeutics go up and down completely randomly.

Pair Corralation between MediciNova and Marker Therapeutics

Given the investment horizon of 90 days MediciNova is expected to generate 1.11 times more return on investment than Marker Therapeutics. However, MediciNova is 1.11 times more volatile than Marker Therapeutics. It trades about 0.09 of its potential returns per unit of risk. Marker Therapeutics is currently generating about 0.01 per unit of risk. If you would invest  150.00  in MediciNova on August 30, 2024 and sell it today you would earn a total of  51.00  from holding MediciNova or generate 34.0% return on investment over 90 days.

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

MediciNova  vs.  Marker Therapeutics

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 weak basic indicators, MediciNova showed solid returns over the last few months and may actually be approaching a breakup point.

Marker Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marker Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Marker Therapeutics is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with MediciNova and Marker Therapeutics

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

The idea behind MediciNova and Marker Therapeutics 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.