Correlation Between Moleculin Biotech and Pulmatrix

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

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

Diversification Opportunities for Moleculin Biotech and Pulmatrix

-0.32

Correlation Coefficient

Moleculin Biotech  Pulmatrix

Very good diversification

The 3 months correlation between Moleculin and Pulmatrix is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Moleculin Biotech and Pulmatrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulmatrix 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 Pulmatrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulmatrix has no effect on the direction of Moleculin Biotech i.e., Moleculin Biotech and Pulmatrix go up and down completely randomly.

Pair Corralation between Moleculin Biotech and Pulmatrix

Given the investment horizon of 90 days Moleculin Biotech is expected to generate 4.36 times more return on investment than Pulmatrix. However, Moleculin Biotech is 4.36 times more volatile than Pulmatrix. It trades about 0.04 of its potential returns per unit of risk. Pulmatrix is currently generating about 0.04 per unit of risk. If you would invest  179.00  in Moleculin Biotech on December 30, 2024 and sell it today you would lose (75.00) from holding Moleculin Biotech or give up 41.9% of portfolio value over 90 days.

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

Moleculin Biotech  vs.  Pulmatrix

Moleculin Biotech

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Moleculin Biotech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Moleculin Biotech showed solid returns over the last few months and may actually be approaching a breakup point.

Pulmatrix

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Moleculin Biotech and Pulmatrix

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

The idea behind Moleculin Biotech and Pulmatrix 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.