Correlation Between Molecular Partners and Phathom Pharmaceuticals

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

Diversification Opportunities for Molecular Partners and Phathom Pharmaceuticals

0.43

Correlation Coefficient

Molecular Partners  Phathom Pharmaceuticals

Very weak diversification

The 3 months correlation between Molecular and Phathom is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Molecular Partners AG and Phathom Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phathom Pharmaceuticals 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 Phathom Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phathom Pharmaceuticals has no effect on the direction of Molecular Partners i.e., Molecular Partners and Phathom Pharmaceuticals go up and down completely randomly.

Pair Corralation between Molecular Partners and Phathom Pharmaceuticals

Given the investment horizon of 90 days Molecular Partners AG is expected to generate 0.74 times more return on investment than Phathom Pharmaceuticals. However, Molecular Partners AG is 1.36 times less risky than Phathom Pharmaceuticals. It trades about -0.01 of its potential returns per unit of risk. Phathom Pharmaceuticals is currently generating about -0.02 per unit of risk. If you would invest  499.00  in Molecular Partners AG on December 30, 2024 and sell it today you would lose (43.00) from holding Molecular Partners AG or give up 8.62% of portfolio value over 90 days.

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

Molecular Partners AG  vs.  Phathom Pharmaceuticals

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 newest stock price disarray, may contribute to short-term losses for the investors.

Phathom Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Phathom Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Molecular Partners and Phathom Pharmaceuticals

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

The idea behind Molecular Partners AG and Phathom Pharmaceuticals 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.