Correlation Between Molecular Partners and Foghorn Therapeutics
Can any of the company-specific risk be diversified away by investing in both Molecular Partners and Foghorn Therapeutics 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 Molecular Partners and Foghorn Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molecular Partners AG and Foghorn Therapeutics, you can compare the effects of market volatilities on Molecular Partners and Foghorn Therapeutics 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 Molecular Partners with a short position of Foghorn Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molecular Partners and Foghorn Therapeutics.
Diversification Opportunities for Molecular Partners and Foghorn Therapeutics
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Molecular and Foghorn is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Molecular Partners AG and Foghorn Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foghorn Therapeutics and Molecular Partners 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 Molecular Partners AG are associated (or correlated) with Foghorn Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foghorn Therapeutics has no effect on the direction of Molecular Partners i.e., Molecular Partners and Foghorn Therapeutics go up and down completely randomly.
Pair Corralation between Molecular Partners and Foghorn Therapeutics
Given the investment horizon of 90 days Molecular Partners is expected to generate 2.44 times less return on investment than Foghorn Therapeutics. But when comparing it to its historical volatility, Molecular Partners AG is 1.13 times less risky than Foghorn Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Foghorn Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 543.00 in Foghorn Therapeutics on August 29, 2024 and sell it today you would earn a total of 209.00 from holding Foghorn Therapeutics or generate 38.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molecular Partners AG vs. Foghorn Therapeutics
Performance |
| Timeline |
| Molecular Partners |
| Foghorn Therapeutics |
Molecular Partners and Foghorn Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molecular Partners and Foghorn Therapeutics
The main advantage of trading using opposite Molecular Partners and Foghorn Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molecular Partners position performs unexpectedly, Foghorn Therapeutics 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 Foghorn Therapeutics will offset losses from the drop in Foghorn Therapeutics' long position.| Molecular Partners vs. Mineralys Therapeutics, Common | Molecular Partners vs. AN2 Therapeutics | Molecular Partners vs. Pharvaris BV | Molecular Partners vs. PepGen |
| Foghorn Therapeutics vs. C4 Therapeutics | Foghorn Therapeutics vs. Prelude Therapeutics | Foghorn Therapeutics vs. Rezolute | Foghorn Therapeutics vs. Shattuck Labs |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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