Correlation Between MediciNova and Virax Biolabs

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

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

Diversification Opportunities for MediciNova and Virax Biolabs

-0.39

Correlation Coefficient

MediciNova  Virax Biolabs

Very good diversification

The 3 months correlation between MediciNova and Virax is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding MediciNova and Virax Biolabs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virax Biolabs Group 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 Virax Biolabs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virax Biolabs Group has no effect on the direction of MediciNova i.e., MediciNova and Virax Biolabs go up and down completely randomly.

Pair Corralation between MediciNova and Virax Biolabs

Given the investment horizon of 90 days MediciNova is expected to generate 0.39 times more return on investment than Virax Biolabs. However, MediciNova is 2.55 times less risky than Virax Biolabs. It trades about 0.13 of its potential returns per unit of risk. Virax Biolabs Group is currently generating about 0.05 per unit of risk. If you would invest  195.00  in MediciNova on September 21, 2024 and sell it today you would earn a total of  21.00  from holding MediciNova or generate 10.77% return on investment over 90 days.

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

MediciNova  vs.  Virax Biolabs Group

MediciNova

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MediciNova are ranked lower than 4 (%) 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.

Virax Biolabs Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virax Biolabs Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Virax Biolabs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MediciNova and Virax Biolabs

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

The idea behind MediciNova and Virax Biolabs Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.