Correlation Between Molecular Partners and Waters

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

Diversification Opportunities for Molecular Partners and Waters

0.18

Correlation Coefficient

Molecular Partners  Waters

Average diversification

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

Pair Corralation between Molecular Partners and Waters

Given the investment horizon of 90 days Molecular Partners AG is expected to generate 2.68 times more return on investment than Waters. However, Molecular Partners is 2.68 times more volatile than Waters. It trades about 0.02 of its potential returns per unit of risk. Waters is currently generating about 0.02 per unit of risk. If you would invest  624.00  in Molecular Partners AG on September 14, 2024 and sell it today you would lose (69.00) from holding Molecular Partners AG or give up 11.06% of portfolio value over 90 days.

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

Molecular Partners AG  vs.  Waters

Molecular Partners

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Molecular Partners AG are ranked lower than 3 (%) 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.

Waters

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waters are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Waters unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molecular Partners and Waters

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

The idea behind Molecular Partners AG and Waters 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.