Correlation Between Replimune and MAIA Biotechnology

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

By analyzing existing cross correlation between Replimune Group and MAIA Biotechnology, you can compare the effects of market volatilities on Replimune and MAIA Biotechnology 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 Replimune with a short position of MAIA Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Replimune and MAIA Biotechnology.

Diversification Opportunities for Replimune and MAIA Biotechnology

-0.5

Correlation Coefficient

Replimune  MAIA Biotechnology

Very good diversification

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

Pair Corralation between Replimune and MAIA Biotechnology

Given the investment horizon of 90 days Replimune Group is expected to under-perform the MAIA Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, Replimune Group is 1.3 times less risky than MAIA Biotechnology. The stock trades about -0.02 of its potential returns per unit of risk. The MAIA Biotechnology is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  221.00  in MAIA Biotechnology on November 29, 2024 and sell it today you would lose (20.00) from holding MAIA Biotechnology or give up 9.05% of portfolio value over 90 days.

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

Replimune Group  vs.  MAIA Biotechnology

Replimune Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Replimune Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Replimune is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

MAIA Biotechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days MAIA Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, MAIA Biotechnology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Replimune and MAIA Biotechnology

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

The idea behind Replimune Group and MAIA Biotechnology 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.