Correlation Between Molecular Partners and Neogen

Can any of the company-specific risk be diversified away by investing in both Molecular Partners and Neogen 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 Neogen 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 Neogen, you can compare the effects of market volatilities on Molecular Partners and Neogen 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 Neogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molecular Partners and Neogen.

Diversification Opportunities for Molecular Partners and Neogen

0.63

Correlation Coefficient

Molecular Partners  Neogen

Poor diversification

The 3 months correlation between Molecular and Neogen is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Molecular Partners AG and Neogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen 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 Neogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogen has no effect on the direction of Molecular Partners i.e., Molecular Partners and Neogen go up and down completely randomly.

Pair Corralation between Molecular Partners and Neogen

Given the investment horizon of 90 days Molecular Partners AG is expected to generate 1.64 times more return on investment than Neogen. However, Molecular Partners is 1.64 times more volatile than Neogen. It trades about -0.07 of its potential returns per unit of risk. Neogen is currently generating about -0.27 per unit of risk. If you would invest  420.00  in Molecular Partners AG on February 1, 2024 and sell it today you would lose (42.00) from holding Molecular Partners AG or give up 10.0% of portfolio value over 90 days.

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

Molecular Partners AG  vs.  Neogen

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 uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Neogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Molecular Partners and Neogen

The main advantage of trading using opposite Molecular Partners and Neogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molecular Partners position performs unexpectedly, Neogen 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 Neogen will offset losses from the drop in Neogen's long position.

The idea behind Molecular Partners AG and Neogen 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.