Correlation Between Monte Rosa and RAPT Therapeutics

Can any of the company-specific risk be diversified away by investing in both Monte Rosa and RAPT Therapeutics 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 Monte Rosa and RAPT Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Monte Rosa and RAPT Therapeutics

0.16

Correlation Coefficient

Monte Rosa  RAPT Therapeutics

Average diversification

The 3 months correlation between Monte and RAPT is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Monte Rosa Therapeutics and RAPT Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAPT Therapeutics and Monte Rosa 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 Monte Rosa Therapeutics are associated (or correlated) with RAPT Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAPT Therapeutics has no effect on the direction of Monte Rosa i.e., Monte Rosa and RAPT Therapeutics go up and down completely randomly.

Pair Corralation between Monte Rosa and RAPT Therapeutics

Given the investment horizon of 90 days Monte Rosa Therapeutics is expected to under-perform the RAPT Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Monte Rosa Therapeutics is 1.08 times less risky than RAPT Therapeutics. The stock trades about -0.08 of its potential returns per unit of risk. The RAPT Therapeutics is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  169.00  in RAPT Therapeutics on December 27, 2024 and sell it today you would lose (27.50) from holding RAPT Therapeutics or give up 16.27% of portfolio value over 90 days.

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

Monte Rosa Therapeutics  vs.  RAPT Therapeutics

Monte Rosa Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monte Rosa Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

RAPT Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days RAPT Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Monte Rosa and RAPT Therapeutics

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

The idea behind Monte Rosa Therapeutics and RAPT Therapeutics 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.