Correlation Between Monopar Therapeutics and Assembly Biosciences

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

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

Diversification Opportunities for Monopar Therapeutics and Assembly Biosciences

-0.73

Correlation Coefficient

Monopar Therapeutics  Assembly Biosciences

Pay attention - limited upside

The 3 months correlation between Monopar and Assembly is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Monopar Therapeutics and Assembly Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assembly Biosciences and Monopar Therapeutics 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 Monopar Therapeutics are associated (or correlated) with Assembly Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assembly Biosciences has no effect on the direction of Monopar Therapeutics i.e., Monopar Therapeutics and Assembly Biosciences go up and down completely randomly.

Pair Corralation between Monopar Therapeutics and Assembly Biosciences

Given the investment horizon of 90 days Monopar Therapeutics is expected to generate 5.65 times more return on investment than Assembly Biosciences. However, Monopar Therapeutics is 5.65 times more volatile than Assembly Biosciences. It trades about 0.05 of its potential returns per unit of risk. Assembly Biosciences is currently generating about 0.02 per unit of risk. If you would invest  1,335  in Monopar Therapeutics on December 2, 2024 and sell it today you would earn a total of  2,176  from holding Monopar Therapeutics or generate 163.0% return on investment over 90 days.

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

Monopar Therapeutics  vs.  Assembly Biosciences

Monopar Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monopar Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Monopar Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Assembly Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Assembly Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's primary indicators remain somewhat 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.

Pair Trading with Monopar Therapeutics and Assembly Biosciences

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

The idea behind Monopar Therapeutics and Assembly Biosciences 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.