Correlation Between Moleculin Biotech and Axsome Therapeutics

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

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

Diversification Opportunities for Moleculin Biotech and Axsome Therapeutics

0.51

Correlation Coefficient

Moleculin Biotech  Axsome Therapeutics

Very weak diversification

The 3 months correlation between Moleculin and Axsome is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Moleculin Biotech and Axsome Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axsome Therapeutics and Moleculin Biotech 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 Moleculin Biotech are associated (or correlated) with Axsome Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axsome Therapeutics has no effect on the direction of Moleculin Biotech i.e., Moleculin Biotech and Axsome Therapeutics go up and down completely randomly.

Pair Corralation between Moleculin Biotech and Axsome Therapeutics

Given the investment horizon of 90 days Moleculin Biotech is expected to under-perform the Axsome Therapeutics. In addition to that, Moleculin Biotech is 3.14 times more volatile than Axsome Therapeutics. It trades about -0.24 of its total potential returns per unit of risk. Axsome Therapeutics is currently generating about -0.36 per unit of volatility. If you would invest  9,976  in Axsome Therapeutics on October 9, 2024 and sell it today you would lose (1,463) from holding Axsome Therapeutics or give up 14.67% of portfolio value over 90 days.

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

Moleculin Biotech  vs.  Axsome Therapeutics

Moleculin Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moleculin Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Axsome Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Axsome Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Axsome Therapeutics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Moleculin Biotech and Axsome Therapeutics

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

The idea behind Moleculin Biotech and Axsome 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.