Correlation Between Mural Oncology and FormFactor

Can any of the company-specific risk be diversified away by investing in both Mural Oncology and FormFactor 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 Mural Oncology and FormFactor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mural Oncology plc and FormFactor, you can compare the effects of market volatilities on Mural Oncology and FormFactor 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 Mural Oncology with a short position of FormFactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mural Oncology and FormFactor.

Diversification Opportunities for Mural Oncology and FormFactor

-0.42

Correlation Coefficient

Mural Oncology  FormFactor

Very good diversification

The 3 months correlation between Mural and FormFactor is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Mural Oncology plc and FormFactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormFactor and Mural Oncology 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 Mural Oncology plc are associated (or correlated) with FormFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormFactor has no effect on the direction of Mural Oncology i.e., Mural Oncology and FormFactor go up and down completely randomly.

Pair Corralation between Mural Oncology and FormFactor

Given the investment horizon of 90 days Mural Oncology plc is expected to generate 1.22 times more return on investment than FormFactor. However, Mural Oncology is 1.22 times more volatile than FormFactor. It trades about 0.09 of its potential returns per unit of risk. FormFactor is currently generating about -0.19 per unit of risk. If you would invest  329.00  in Mural Oncology plc on December 21, 2024 and sell it today you would earn a total of  58.00  from holding Mural Oncology plc or generate 17.63% return on investment over 90 days.

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

Mural Oncology plc  vs.  FormFactor

Mural Oncology plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mural Oncology plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mural Oncology sustained solid returns over the last few months and may actually be approaching a breakup point.

FormFactor

Risk-Adjusted Performance

Very Weak

Over the last 90 days FormFactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Mural Oncology and FormFactor

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

The idea behind Mural Oncology plc and FormFactor 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.