Correlation Between Huntsman and Molecular Data

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

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

Diversification Opportunities for Huntsman and Molecular Data

0.0

Correlation Coefficient

Huntsman  Molecular Data

Pay attention - limited upside

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

Pair Corralation between Huntsman and Molecular Data

If you would invest (100.00) in Molecular Data on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Molecular Data or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Huntsman  vs.  Molecular Data

Huntsman

Risk-Adjusted Performance

Very Weak

Over the last 90 days Huntsman has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Molecular Data

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Huntsman and Molecular Data

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

The idea behind Huntsman and Molecular Data 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.