Correlation Between Molecule Holdings and Advantage Solutions

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

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

Diversification Opportunities for Molecule Holdings and Advantage Solutions

0.0

Correlation Coefficient

Molecule Holdings  Advantage Solutions

Pay attention - limited upside

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

Pair Corralation between Molecule Holdings and Advantage Solutions

If you would invest  2.00  in Advantage Solutions on December 2, 2024 and sell it today you would lose (0.29) from holding Advantage Solutions or give up 14.5% of portfolio value over 90 days.

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

Molecule Holdings  vs.  Advantage Solutions

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.

Advantage Solutions

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Solutions are ranked lower than 2 (%) 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.

Pair Trading with Molecule Holdings and Advantage Solutions

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

The idea behind Molecule Holdings and Advantage Solutions 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.