Correlation Between Gossamer Bio and Molecular Partners

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

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

Diversification Opportunities for Gossamer Bio and Molecular Partners

-0.33

Correlation Coefficient

Gossamer Bio  Molecular Partners

Very good diversification

The 3 months correlation between Gossamer and Molecular is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Gossamer Bio and Molecular Partners AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molecular Partners and Gossamer Bio 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 Gossamer Bio are associated (or correlated) with Molecular Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molecular Partners has no effect on the direction of Gossamer Bio i.e., Gossamer Bio and Molecular Partners go up and down completely randomly.

Pair Corralation between Gossamer Bio and Molecular Partners

Given the investment horizon of 90 days Gossamer Bio is expected to generate 2.47 times more return on investment than Molecular Partners. However, Gossamer Bio is 2.47 times more volatile than Molecular Partners AG. It trades about 0.24 of its potential returns per unit of risk. Molecular Partners AG is currently generating about -0.22 per unit of risk. If you would invest  70.00  in Gossamer Bio on October 4, 2024 and sell it today you would earn a total of  27.00  from holding Gossamer Bio or generate 38.57% return on investment over 90 days.

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

Gossamer Bio  vs.  Molecular Partners AG

Gossamer Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gossamer Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gossamer Bio is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Molecular Partners

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Molecular Partners AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Molecular Partners may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gossamer Bio and Molecular Partners

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

The idea behind Gossamer Bio and Molecular Partners AG 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.