Correlation Between Fresh Tracks and Applied Molecular

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

By analyzing existing cross correlation between Fresh Tracks Therapeutics and Applied Molecular Transport, you can compare the effects of market volatilities on Fresh Tracks and Applied Molecular 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 Fresh Tracks with a short position of Applied Molecular. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresh Tracks and Applied Molecular.

Diversification Opportunities for Fresh Tracks and Applied Molecular

0.45

Correlation Coefficient

Fresh Tracks  Applied Molecular

Very weak diversification

The 3 months correlation between Fresh and Applied is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Tracks Therapeutics and Applied Molecular Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Molecular and Fresh Tracks 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 Fresh Tracks Therapeutics are associated (or correlated) with Applied Molecular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Molecular has no effect on the direction of Fresh Tracks i.e., Fresh Tracks and Applied Molecular go up and down completely randomly.

Pair Corralation between Fresh Tracks and Applied Molecular

Given the investment horizon of 90 days Fresh Tracks Therapeutics is expected to under-perform the Applied Molecular. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fresh Tracks Therapeutics is 1.04 times less risky than Applied Molecular. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Applied Molecular Transport is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  64.00  in Applied Molecular Transport on October 24, 2024 and sell it today you would lose (31.00) from holding Applied Molecular Transport or give up 48.44% of portfolio value over 90 days.

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

Fresh Tracks Therapeutics  vs.  Applied Molecular Transport

Fresh Tracks Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fresh Tracks Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Fresh Tracks is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Applied Molecular

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fresh Tracks and Applied Molecular

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

The idea behind Fresh Tracks Therapeutics and Applied Molecular Transport 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.