Correlation Between MoonLake Immunotherapeuti and Edgewise Therapeutics

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

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

Diversification Opportunities for MoonLake Immunotherapeuti and Edgewise Therapeutics

0.53

Correlation Coefficient

MoonLake Immunotherapeuti  Edgewise Therapeutics

Very weak diversification

The 3 months correlation between MoonLake and Edgewise is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding MoonLake Immunotherapeutics and Edgewise Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewise Therapeutics and MoonLake Immunotherapeuti 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 MoonLake Immunotherapeutics are associated (or correlated) with Edgewise Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewise Therapeutics has no effect on the direction of MoonLake Immunotherapeuti i.e., MoonLake Immunotherapeuti and Edgewise Therapeutics go up and down completely randomly.

Pair Corralation between MoonLake Immunotherapeuti and Edgewise Therapeutics

Given the investment horizon of 90 days MoonLake Immunotherapeutics is expected to under-perform the Edgewise Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, MoonLake Immunotherapeutics is 1.27 times less risky than Edgewise Therapeutics. The stock trades about -0.15 of its potential returns per unit of risk. The Edgewise Therapeutics is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,706  in Edgewise Therapeutics on December 30, 2024 and sell it today you would lose (379.00) from holding Edgewise Therapeutics or give up 14.01% of portfolio value over 90 days.

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

MoonLake Immunotherapeutics  vs.  Edgewise Therapeutics

MoonLake Immunotherapeuti

Risk-Adjusted Performance

Very Weak

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

Edgewise Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edgewise Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with MoonLake Immunotherapeuti and Edgewise Therapeutics

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

The idea behind MoonLake Immunotherapeutics and Edgewise 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.