Correlation Between Adagene and Molecular Partners
Can any of the company-specific risk be diversified away by investing in both Adagene 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 Adagene and Molecular Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adagene and Molecular Partners AG, you can compare the effects of market volatilities on Adagene 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 Adagene with a short position of Molecular Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adagene and Molecular Partners.
Diversification Opportunities for Adagene and Molecular Partners
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adagene and Molecular is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Adagene and Molecular Partners AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molecular Partners and Adagene 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 Adagene 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 Adagene i.e., Adagene and Molecular Partners go up and down completely randomly.
Pair Corralation between Adagene and Molecular Partners
Given the investment horizon of 90 days Adagene is expected to generate 1.13 times more return on investment than Molecular Partners. However, Adagene is 1.13 times more volatile than Molecular Partners AG. It trades about 0.05 of its potential returns per unit of risk. Molecular Partners AG is currently generating about 0.02 per unit of risk. If you would invest 109.00 in Adagene on August 24, 2024 and sell it today you would earn a total of 110.00 from holding Adagene or generate 100.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adagene vs. Molecular Partners AG
Performance |
| Timeline |
| Adagene |
| Molecular Partners |
Adagene and Molecular Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adagene and Molecular Partners
The main advantage of trading using opposite Adagene and Molecular Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adagene 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.| Adagene vs. Aerovate Therapeutics | Adagene vs. Acrivon Therapeutics, Common | Adagene vs. Rezolute | Adagene vs. AN2 Therapeutics |
| Molecular Partners vs. Mineralys Therapeutics, Common | Molecular Partners vs. AN2 Therapeutics | Molecular Partners vs. Pharvaris BV | Molecular Partners vs. PepGen |
Check out your portfolio center.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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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