Correlation Between Molecular Partners and Graphite Bio

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

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

Diversification Opportunities for Molecular Partners and Graphite Bio

-0.35

Correlation Coefficient

Molecular Partners  Graphite Bio

Very good diversification

The 3 months correlation between Molecular and Graphite is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Molecular Partners AG and Graphite Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphite Bio and Molecular Partners 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 Molecular Partners AG are associated (or correlated) with Graphite Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphite Bio has no effect on the direction of Molecular Partners i.e., Molecular Partners and Graphite Bio go up and down completely randomly.

Pair Corralation between Molecular Partners and Graphite Bio

Given the investment horizon of 90 days Molecular Partners AG is expected to generate 1.16 times more return on investment than Graphite Bio. However, Molecular Partners is 1.16 times more volatile than Graphite Bio. It trades about 0.02 of its potential returns per unit of risk. Graphite Bio is currently generating about 0.0 per unit of risk. If you would invest  704.00  in Molecular Partners AG on September 4, 2024 and sell it today you would lose (164.00) from holding Molecular Partners AG or give up 23.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	30.71%
Values	Daily Returns

Molecular Partners AG  vs.  Graphite Bio

Molecular Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molecular Partners AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Molecular Partners is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Graphite Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graphite Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Graphite Bio is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Molecular Partners and Graphite Bio

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

The idea behind Molecular Partners AG and Graphite Bio 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.