Correlation Between Orient Pharma and Medigen Biotechnology

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Can any of the company-specific risk be diversified away by investing in both Orient Pharma and Medigen 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 Orient Pharma and Medigen Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orient Pharma Co and Medigen Biotechnology, you can compare the effects of market volatilities on Orient Pharma and Medigen 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 Orient Pharma with a short position of Medigen Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Pharma and Medigen Biotechnology.

Diversification Opportunities for Orient Pharma and Medigen Biotechnology

-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Orient and Medigen is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Orient Pharma Co and Medigen Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medigen Biotechnology and Orient Pharma 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 Orient Pharma Co are associated (or correlated) with Medigen Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medigen Biotechnology has no effect on the direction of Orient Pharma i.e., Orient Pharma and Medigen Biotechnology go up and down completely randomly.

Pair Corralation between Orient Pharma and Medigen Biotechnology

Assuming the 90 days trading horizon Orient Pharma Co is expected to generate 2.46 times more return on investment than Medigen Biotechnology. However, Orient Pharma is 2.46 times more volatile than Medigen Biotechnology. It trades about 0.05 of its potential returns per unit of risk. Medigen Biotechnology is currently generating about -0.17 per unit of risk. If you would invest  3,610  in Orient Pharma Co on September 13, 2024 and sell it today you would earn a total of  105.00  from holding Orient Pharma Co or generate 2.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Orient Pharma Co  vs.  Medigen Biotechnology

 Performance 
       Timeline  
Orient Pharma 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Orient Pharma Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Orient Pharma showed solid returns over the last few months and may actually be approaching a breakup point.
Medigen Biotechnology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Medigen Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Medigen Biotechnology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Orient Pharma and Medigen Biotechnology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Orient Pharma and Medigen Biotechnology

The main advantage of trading using opposite Orient Pharma and Medigen Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Pharma position performs unexpectedly, Medigen 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 Medigen Biotechnology will offset losses from the drop in Medigen Biotechnology's long position.
The idea behind Orient Pharma Co and Medigen 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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