Correlation Between Desktop Metal and Mynaric AG

Can any of the company-specific risk be diversified away by investing in both Desktop Metal and Mynaric AG 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 Desktop Metal and Mynaric AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Desktop Metal and Mynaric AG

0.71

Correlation Coefficient

Desktop Metal  Mynaric AG

Poor diversification

The 3 months correlation between Desktop and Mynaric is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Mynaric AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mynaric AG ADR and Desktop Metal 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 Desktop Metal are associated (or correlated) with Mynaric AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mynaric AG ADR has no effect on the direction of Desktop Metal i.e., Desktop Metal and Mynaric AG go up and down completely randomly.

Pair Corralation between Desktop Metal and Mynaric AG

Allowing for the 90-day total investment horizon Desktop Metal is expected to under-perform the Mynaric AG. But the stock apears to be less risky and, when comparing its historical volatility, Desktop Metal is 1.9 times less risky than Mynaric AG. The stock trades about -0.1 of its potential returns per unit of risk. The Mynaric AG ADR is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  480.00  in Mynaric AG ADR on October 8, 2024 and sell it today you would lose (401.00) from holding Mynaric AG ADR or give up 83.54% of portfolio value over 90 days.

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

Desktop Metal  vs.  Mynaric AG ADR

Desktop Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Desktop Metal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Mynaric AG ADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mynaric AG ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Mynaric AG sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Desktop Metal and Mynaric AG

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

The idea behind Desktop Metal and Mynaric AG ADR 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.