Correlation Between Molecular Partners and Medpace Holdings

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

Diversification Opportunities for Molecular Partners and Medpace Holdings

-0.18

Correlation Coefficient

Molecular Partners  Medpace Holdings

Good diversification

The 3 months correlation between Molecular and Medpace is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Molecular Partners AG and Medpace Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medpace Holdings 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 Medpace Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medpace Holdings has no effect on the direction of Molecular Partners i.e., Molecular Partners and Medpace Holdings go up and down completely randomly.

Pair Corralation between Molecular Partners and Medpace Holdings

Given the investment horizon of 90 days Molecular Partners is expected to generate 1.3 times less return on investment than Medpace Holdings. In addition to that, Molecular Partners is 2.13 times more volatile than Medpace Holdings. It trades about 0.02 of its total potential returns per unit of risk. Medpace Holdings is currently generating about 0.05 per unit of volatility. If you would invest  20,828  in Medpace Holdings on September 21, 2024 and sell it today you would earn a total of  12,687  from holding Medpace Holdings or generate 60.91% 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.  Medpace Holdings

Molecular Partners

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Molecular Partners AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Molecular Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

Medpace Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medpace Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Medpace Holdings is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Molecular Partners and Medpace Holdings

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

The idea behind Molecular Partners AG and Medpace Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.