Correlation Between Molecular Partners and Genenta Science

Can any of the company-specific risk be diversified away by investing in both Molecular Partners and Genenta Science 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 Genenta Science 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 Genenta Science SpA, you can compare the effects of market volatilities on Molecular Partners and Genenta Science 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 Genenta Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molecular Partners and Genenta Science.

Diversification Opportunities for Molecular Partners and Genenta Science

0.37

Correlation Coefficient

Molecular Partners  Genenta Science

Weak diversification

The 3 months correlation between Molecular and Genenta is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Molecular Partners AG and Genenta Science SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genenta Science SpA 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 Genenta Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genenta Science SpA has no effect on the direction of Molecular Partners i.e., Molecular Partners and Genenta Science go up and down completely randomly.

Pair Corralation between Molecular Partners and Genenta Science

Given the investment horizon of 90 days Molecular Partners AG is expected to under-perform the Genenta Science. But the stock apears to be less risky and, when comparing its historical volatility, Molecular Partners AG is 1.02 times less risky than Genenta Science. The stock trades about -0.01 of its potential returns per unit of risk. The Genenta Science SpA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  430.00  in Genenta Science SpA on December 29, 2024 and sell it today you would lose (32.00) from holding Genenta Science SpA or give up 7.44% of portfolio value over 90 days.

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

Molecular Partners AG  vs.  Genenta Science SpA

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.

Genenta Science SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genenta Science SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Genenta Science is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Molecular Partners and Genenta Science

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

The idea behind Molecular Partners AG and Genenta Science SpA 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.