Correlation Between Molecular Partners and Illumina

Can any of the company-specific risk be diversified away by investing in both Molecular Partners and Illumina 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 Illumina 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 Illumina, you can compare the effects of market volatilities on Molecular Partners and Illumina 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 Illumina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molecular Partners and Illumina.

Diversification Opportunities for Molecular Partners and Illumina

0.51

Correlation Coefficient

Molecular Partners  Illumina

Very weak diversification

The 3 months correlation between Molecular and Illumina is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Molecular Partners AG and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina 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 Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of Molecular Partners i.e., Molecular Partners and Illumina go up and down completely randomly.

Pair Corralation between Molecular Partners and Illumina

Given the investment horizon of 90 days Molecular Partners AG is expected to generate 2.01 times more return on investment than Illumina. However, Molecular Partners is 2.01 times more volatile than Illumina. It trades about 0.02 of its potential returns per unit of risk. Illumina is currently generating about -0.01 per unit of risk. If you would invest  654.00  in Molecular Partners AG on September 25, 2024 and sell it today you would lose (110.00) from holding Molecular Partners AG or give up 16.82% of portfolio value over 90 days.

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

Molecular Partners AG  vs.  Illumina

Molecular Partners

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Molecular Partners AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady essential indicators, Molecular Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

Illumina

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Illumina are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Illumina may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Molecular Partners and Illumina

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

The idea behind Molecular Partners AG and Illumina 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.