Correlation Between MediciNova and Exagen

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

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

Diversification Opportunities for MediciNova and Exagen

0.73

Correlation Coefficient

MediciNova  Exagen

Poor diversification

The 3 months correlation between MediciNova and Exagen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MediciNova and Exagen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exagen Inc 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 Exagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exagen Inc has no effect on the direction of MediciNova i.e., MediciNova and Exagen go up and down completely randomly.

Pair Corralation between MediciNova and Exagen

Given the investment horizon of 90 days MediciNova is expected to generate 1.3 times less return on investment than Exagen. In addition to that, MediciNova is 1.0 times more volatile than Exagen Inc. It trades about 0.11 of its total potential returns per unit of risk. Exagen Inc is currently generating about 0.15 per unit of volatility. If you would invest  246.00  in Exagen Inc on October 6, 2024 and sell it today you would earn a total of  112.00  from holding Exagen Inc or generate 45.53% return on investment over 90 days.

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

MediciNova  vs.  Exagen Inc

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.

Exagen Inc

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with MediciNova and Exagen

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

The idea behind MediciNova and Exagen Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.