Correlation Between Pulmatrix and Molecular Partners

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

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

Diversification Opportunities for Pulmatrix and Molecular Partners

-0.12

Correlation Coefficient

Pulmatrix  Molecular Partners

Good diversification

The 3 months correlation between Pulmatrix and Molecular is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Pulmatrix and Molecular Partners AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molecular Partners and Pulmatrix 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 Pulmatrix 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 Pulmatrix i.e., Pulmatrix and Molecular Partners go up and down completely randomly.

Pair Corralation between Pulmatrix and Molecular Partners

Given the investment horizon of 90 days Pulmatrix is expected to generate 0.77 times more return on investment than Molecular Partners. However, Pulmatrix is 1.3 times less risky than Molecular Partners. It trades about 0.05 of its potential returns per unit of risk. Molecular Partners AG is currently generating about -0.03 per unit of risk. If you would invest  178.00  in Pulmatrix on February 20, 2024 and sell it today you would earn a total of  13.00  from holding Pulmatrix or generate 7.3% return on investment over 90 days.

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

Pulmatrix  vs.  Molecular Partners AG

Pulmatrix

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pulmatrix are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Pulmatrix may actually be approaching a critical reversion point that can send shares even higher in June 2024.

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 latest weak performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Pulmatrix and Molecular Partners

The main advantage of trading using opposite Pulmatrix and Molecular Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pulmatrix 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 Pulmatrix 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.