Correlation Between Maxigen Biotech and Wei Chuan
Can any of the company-specific risk be diversified away by investing in both Maxigen Biotech and Wei Chuan 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 Maxigen Biotech and Wei Chuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maxigen Biotech and Wei Chuan Foods, you can compare the effects of market volatilities on Maxigen Biotech and Wei Chuan 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 Maxigen Biotech with a short position of Wei Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maxigen Biotech and Wei Chuan.
Diversification Opportunities for Maxigen Biotech and Wei Chuan
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Maxigen and Wei is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Maxigen Biotech and Wei Chuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wei Chuan Foods and Maxigen Biotech 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 Maxigen Biotech are associated (or correlated) with Wei Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wei Chuan Foods has no effect on the direction of Maxigen Biotech i.e., Maxigen Biotech and Wei Chuan go up and down completely randomly.
Pair Corralation between Maxigen Biotech and Wei Chuan
Assuming the 90 days trading horizon Maxigen Biotech is expected to generate 4.75 times more return on investment than Wei Chuan. However, Maxigen Biotech is 4.75 times more volatile than Wei Chuan Foods. It trades about 0.02 of its potential returns per unit of risk. Wei Chuan Foods is currently generating about 0.0 per unit of risk. If you would invest 5,010 in Maxigen Biotech on November 4, 2024 and sell it today you would earn a total of 20.00 from holding Maxigen Biotech or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maxigen Biotech vs. Wei Chuan Foods
Performance |
| Timeline |
| Maxigen Biotech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Wei Chuan Foods |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Maxigen Biotech and Wei Chuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maxigen Biotech and Wei Chuan
The main advantage of trading using opposite Maxigen Biotech and Wei Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maxigen Biotech position performs unexpectedly, Wei Chuan 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 Wei Chuan will offset losses from the drop in Wei Chuan's long position.The idea behind Maxigen Biotech and Wei Chuan Foods 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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