Correlation Between RAPT Therapeutics and Monte Rosa

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

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

Diversification Opportunities for RAPT Therapeutics and Monte Rosa

0.16

Correlation Coefficient

RAPT Therapeutics  Monte Rosa

Average diversification

The 3 months correlation between RAPT and Monte is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding RAPT Therapeutics and Monte Rosa Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monte Rosa Therapeutics and RAPT Therapeutics 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 RAPT Therapeutics are associated (or correlated) with Monte Rosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monte Rosa Therapeutics has no effect on the direction of RAPT Therapeutics i.e., RAPT Therapeutics and Monte Rosa go up and down completely randomly.

Pair Corralation between RAPT Therapeutics and Monte Rosa

Given the investment horizon of 90 days RAPT Therapeutics is expected to generate 1.08 times more return on investment than Monte Rosa. However, RAPT Therapeutics is 1.08 times more volatile than Monte Rosa Therapeutics. It trades about -0.03 of its potential returns per unit of risk. Monte Rosa Therapeutics is currently generating about -0.08 per unit of risk. If you would invest  169.00  in RAPT Therapeutics on December 27, 2024 and sell it today you would lose (27.50) from holding RAPT Therapeutics or give up 16.27% of portfolio value over 90 days.

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

RAPT Therapeutics  vs.  Monte Rosa Therapeutics

RAPT Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days RAPT Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Monte Rosa Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monte Rosa Therapeutics 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 rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with RAPT Therapeutics and Monte Rosa

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

The idea behind RAPT Therapeutics and Monte Rosa Therapeutics 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.