Correlation Between Adicet Bio and Molecular Partners

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

By analyzing existing cross correlation between Adicet Bio and Molecular Partners AG, you can compare the effects of market volatilities on Adicet Bio and Molecular Partners 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 Adicet Bio with a short position of Molecular Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adicet Bio and Molecular Partners.

Diversification Opportunities for Adicet Bio and Molecular Partners

0.84

Correlation Coefficient

Adicet Bio  Molecular Partners

Very poor diversification

The 3 months correlation between Adicet and Molecular is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Adicet Bio and Molecular Partners AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molecular Partners and Adicet Bio 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 Adicet Bio are associated (or correlated) with Molecular Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molecular Partners has no effect on the direction of Adicet Bio i.e., Adicet Bio and Molecular Partners go up and down completely randomly.

Pair Corralation between Adicet Bio and Molecular Partners

Given the investment horizon of 90 days Adicet Bio is expected to under-perform the Molecular Partners. But the stock apears to be less risky and, when comparing its historical volatility, Adicet Bio is 1.05 times less risky than Molecular Partners. The stock trades about -0.36 of its potential returns per unit of risk. The Molecular Partners AG is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  405.00  in Molecular Partners AG on February 3, 2024 and sell it today you would lose (28.00) from holding Molecular Partners AG or give up 6.91% of portfolio value over 90 days.

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

Adicet Bio  vs.  Molecular Partners AG

Adicet Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adicet Bio 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Molecular Partners

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Adicet Bio and Molecular Partners

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

The idea behind Adicet Bio and Molecular Partners AG 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.