Correlation Between GM and Molecular Partners
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Molecular Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Molecular Partners AG, you can compare the effects of market volatilities on GM 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 GM with a short position of Molecular Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Molecular Partners.
Diversification Opportunities for GM and Molecular Partners
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Molecular is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Molecular Partners AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molecular Partners and GM 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 General Motors 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 GM i.e., GM and Molecular Partners go up and down completely randomly.
Pair Corralation between GM and Molecular Partners
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.33 times more return on investment than Molecular Partners. However, General Motors is 3.07 times less risky than Molecular Partners. It trades about 0.26 of its potential returns per unit of risk. Molecular Partners AG is currently generating about -0.13 per unit of risk. If you would invest 5,273 in General Motors on August 27, 2024 and sell it today you would earn a total of 580.00 from holding General Motors or generate 11.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Molecular Partners AG
Performance |
| Timeline |
| General Motors |
| Molecular Partners |
GM and Molecular Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Molecular Partners
The main advantage of trading using opposite GM and Molecular Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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.| 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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