Correlation Between Molecular Partners and Sensei Biotherapeutics

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

Diversification Opportunities for Molecular Partners and Sensei Biotherapeutics

0.58

Correlation Coefficient

Molecular Partners  Sensei Biotherapeutics

Very weak diversification

The 3 months correlation between Molecular and Sensei is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Molecular Partners AG and Sensei Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensei Biotherapeutics 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 Sensei Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensei Biotherapeutics has no effect on the direction of Molecular Partners i.e., Molecular Partners and Sensei Biotherapeutics go up and down completely randomly.

Pair Corralation between Molecular Partners and Sensei Biotherapeutics

Given the investment horizon of 90 days Molecular Partners AG is expected to under-perform the Sensei Biotherapeutics. In addition to that, Molecular Partners is 1.09 times more volatile than Sensei Biotherapeutics. It trades about -0.01 of its total potential returns per unit of risk. Sensei Biotherapeutics is currently generating about 0.04 per unit of volatility. If you would invest  48.00  in Sensei Biotherapeutics on December 30, 2024 and sell it today you would earn a total of  3.00  from holding Sensei Biotherapeutics or generate 6.25% return on investment over 90 days.

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

Molecular Partners AG  vs.  Sensei Biotherapeutics

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.

Sensei Biotherapeutics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sensei Biotherapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Sensei Biotherapeutics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Molecular Partners and Sensei Biotherapeutics

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

The idea behind Molecular Partners AG and Sensei Biotherapeutics 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.