Correlation Between MediciNova and Instil Bio

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

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

Diversification Opportunities for MediciNova and Instil Bio

-0.46

Correlation Coefficient

MediciNova  Instil Bio

Very good diversification

The 3 months correlation between MediciNova and Instil is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding MediciNova and Instil Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instil Bio 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 Instil Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instil Bio has no effect on the direction of MediciNova i.e., MediciNova and Instil Bio go up and down completely randomly.

Pair Corralation between MediciNova and Instil Bio

Given the investment horizon of 90 days MediciNova is expected to generate 12.33 times less return on investment than Instil Bio. But when comparing it to its historical volatility, MediciNova is 1.73 times less risky than Instil Bio. It trades about 0.01 of its potential returns per unit of risk. Instil Bio is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,628  in Instil Bio on October 22, 2024 and sell it today you would earn a total of  469.00  from holding Instil Bio or generate 28.81% 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.  Instil Bio

MediciNova

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MediciNova are ranked lower than 2 (%) 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.

Instil Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Instil Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with MediciNova and Instil Bio

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

The idea behind MediciNova and Instil Bio 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 Transaction History module to view history of all your transactions and understand their impact on performance.