Correlation Between Molecular Partners and 89bio

Can any of the company-specific risk be diversified away by investing in both Molecular Partners and 89bio 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 Molecular Partners and 89bio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Molecular Partners AG and 89bio Inc, you can compare the effects of market volatilities on Molecular Partners and 89bio 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 Molecular Partners with a short position of 89bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molecular Partners and 89bio.

Diversification Opportunities for Molecular Partners and 89bio

-0.25

Correlation Coefficient

Molecular Partners  89bio

Very good diversification

The 3 months correlation between Molecular and 89bio is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Molecular Partners AG and 89bio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 89bio Inc and Molecular Partners 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 Molecular Partners AG are associated (or correlated) with 89bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 89bio Inc has no effect on the direction of Molecular Partners i.e., Molecular Partners and 89bio go up and down completely randomly.

Pair Corralation between Molecular Partners and 89bio

Given the investment horizon of 90 days Molecular Partners AG is expected to under-perform the 89bio. But the stock apears to be less risky and, when comparing its historical volatility, Molecular Partners AG is 1.46 times less risky than 89bio. The stock trades about -0.01 of its potential returns per unit of risk. The 89bio Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  779.00  in 89bio Inc on December 29, 2024 and sell it today you would earn a total of  29.00  from holding 89bio Inc or generate 3.72% return on investment over 90 days.

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

Molecular Partners AG  vs.  89bio Inc

Molecular Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Molecular Partners AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Molecular Partners is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

89bio Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 89bio Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, 89bio sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molecular Partners and 89bio

The main advantage of trading using opposite Molecular Partners and 89bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molecular Partners position performs unexpectedly, 89bio 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 89bio will offset losses from the drop in 89bio's long position.

The idea behind Molecular Partners AG and 89bio Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.