Correlation Between Advantage Solutions and Molecule Holdings

Can any of the company-specific risk be diversified away by investing in both Advantage Solutions and Molecule Holdings 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 Advantage Solutions and Molecule Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Advantage Solutions and Molecule Holdings

0.0

Correlation Coefficient

Advantage Solutions  Molecule Holdings

Pay attention - limited upside

The 3 months correlation between Advantage and Molecule is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Molecule Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molecule Holdings and Advantage Solutions 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 Advantage Solutions are associated (or correlated) with Molecule Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molecule Holdings has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Molecule Holdings go up and down completely randomly.

Pair Corralation between Advantage Solutions and Molecule Holdings

If you would invest  1.27  in Advantage Solutions on December 30, 2024 and sell it today you would lose (0.07) from holding Advantage Solutions or give up 5.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Advantage Solutions  vs.  Molecule Holdings

Advantage Solutions

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Solutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advantage Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

Molecule Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Molecule Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Molecule Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Advantage Solutions and Molecule Holdings

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

The idea behind Advantage Solutions and Molecule 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.