Correlation Between HP and Molecular Templates
Can any of the company-specific risk be diversified away by investing in both HP and Molecular Templates 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 HP and Molecular Templates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Molecular Templates, you can compare the effects of market volatilities on HP and Molecular Templates 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 HP with a short position of Molecular Templates. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Molecular Templates.
Diversification Opportunities for HP and Molecular Templates
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HP and Molecular is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Molecular Templates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molecular Templates and HP 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 HP Inc are associated (or correlated) with Molecular Templates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molecular Templates has no effect on the direction of HP i.e., HP and Molecular Templates go up and down completely randomly.
Pair Corralation between HP and Molecular Templates
Considering the 90-day investment horizon HP Inc is expected to generate 0.14 times more return on investment than Molecular Templates. However, HP Inc is 7.34 times less risky than Molecular Templates. It trades about 0.06 of its potential returns per unit of risk. Molecular Templates is currently generating about -0.01 per unit of risk. If you would invest 2,642 in HP Inc on September 1, 2024 and sell it today you would earn a total of 901.00 from holding HP Inc or generate 34.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
HP Inc vs. Molecular Templates
Performance |
| Timeline |
| HP Inc |
| Molecular Templates |
HP and Molecular Templates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Molecular Templates
The main advantage of trading using opposite HP and Molecular Templates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Molecular Templates 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 Templates will offset losses from the drop in Molecular Templates' long position.The idea behind HP Inc and Molecular Templates 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 Templates vs. Century Therapeutics | Molecular Templates vs. Kezar Life Sciences | Molecular Templates vs. Mineralys Therapeutics, Common | Molecular Templates vs. Nkarta Inc |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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