Correlation Between Cue Biopharma and Molecular Partners

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

By analyzing existing cross correlation between Cue Biopharma and Molecular Partners AG, you can compare the effects of market volatilities on Cue Biopharma and Molecular Partners 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 Cue Biopharma with a short position of Molecular Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cue Biopharma and Molecular Partners.

Diversification Opportunities for Cue Biopharma and Molecular Partners

0.44

Correlation Coefficient

Cue Biopharma  Molecular Partners

Very weak diversification

The 3 months correlation between Cue and Molecular is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cue Biopharma and Molecular Partners AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molecular Partners and Cue Biopharma 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 Cue Biopharma are associated (or correlated) with Molecular Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molecular Partners has no effect on the direction of Cue Biopharma i.e., Cue Biopharma and Molecular Partners go up and down completely randomly.

Pair Corralation between Cue Biopharma and Molecular Partners

Considering the 90-day investment horizon Cue Biopharma is expected to generate 1.69 times more return on investment than Molecular Partners. However, Cue Biopharma is 1.69 times more volatile than Molecular Partners AG. It trades about 0.13 of its potential returns per unit of risk. Molecular Partners AG is currently generating about 0.04 per unit of risk. If you would invest  66.00  in Cue Biopharma on August 31, 2024 and sell it today you would earn a total of  56.00  from holding Cue Biopharma or generate 84.85% return on investment over 90 days.

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

Cue Biopharma  vs.  Molecular Partners AG

Cue Biopharma

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cue Biopharma are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Cue Biopharma exhibited solid returns over the last few months and may actually be approaching a breakup point.

Molecular Partners

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Molecular Partners AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Molecular Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cue Biopharma and Molecular Partners

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

The idea behind Cue Biopharma and Molecular Partners AG 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.