Correlation Between Standard Biotools and Molecular Partners

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

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

Diversification Opportunities for Standard Biotools and Molecular Partners

0.03

Correlation Coefficient

Standard Biotools  Molecular Partners

Significant diversification

The 3 months correlation between Standard and Molecular is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Standard Biotools and Molecular Partners AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molecular Partners and Standard Biotools 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 Standard Biotools 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 Standard Biotools i.e., Standard Biotools and Molecular Partners go up and down completely randomly.

Pair Corralation between Standard Biotools and Molecular Partners

Considering the 90-day investment horizon Standard Biotools is expected to generate 1.1 times more return on investment than Molecular Partners. However, Standard Biotools is 1.1 times more volatile than Molecular Partners AG. It trades about 0.07 of its potential returns per unit of risk. Molecular Partners AG is currently generating about 0.03 per unit of risk. If you would invest  184.00  in Standard Biotools on September 14, 2024 and sell it today you would earn a total of  8.00  from holding Standard Biotools or generate 4.35% return on investment over 90 days.

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

Standard Biotools  vs.  Molecular Partners AG

Standard Biotools

Risk-Adjusted Performance

0 of 100

Very Weak

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

Molecular Partners

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Molecular Partners AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Molecular Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Standard Biotools and Molecular Partners

The main advantage of trading using opposite Standard Biotools and Molecular Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Biotools 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 Standard Biotools 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.