Correlation Between Monte Rosa and Dice Molecules

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

By analyzing existing cross correlation between Monte Rosa Therapeutics and Dice Molecules Holdings, you can compare the effects of market volatilities on Monte Rosa and Dice Molecules 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 Monte Rosa with a short position of Dice Molecules. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monte Rosa and Dice Molecules.

Diversification Opportunities for Monte Rosa and Dice Molecules

0.65

Correlation Coefficient

Monte Rosa  Dice Molecules

Poor diversification

The 3 months correlation between Monte and Dice is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Monte Rosa Therapeutics and Dice Molecules Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dice Molecules Holdings and Monte Rosa 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 Monte Rosa Therapeutics are associated (or correlated) with Dice Molecules. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dice Molecules Holdings has no effect on the direction of Monte Rosa i.e., Monte Rosa and Dice Molecules go up and down completely randomly.

Pair Corralation between Monte Rosa and Dice Molecules

If you would invest  608.00  in Monte Rosa Therapeutics on September 13, 2024 and sell it today you would earn a total of  171.00  from holding Monte Rosa Therapeutics or generate 28.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Monte Rosa Therapeutics  vs.  Dice Molecules Holdings

Monte Rosa Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monte Rosa Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Monte Rosa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dice Molecules Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dice Molecules Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dice Molecules is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Monte Rosa and Dice Molecules

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

The idea behind Monte Rosa Therapeutics and Dice Molecules Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.