Correlation Between Molecular Partners and Foghorn TherapeuticsInc

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

Diversification Opportunities for Molecular Partners and Foghorn TherapeuticsInc

-0.38

Correlation Coefficient

Molecular Partners  Foghorn TherapeuticsInc

Very good diversification

The 3 months correlation between Molecular and Foghorn is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Molecular Partners AG and Foghorn TherapeuticsInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foghorn TherapeuticsInc 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 TherapeuticsInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foghorn TherapeuticsInc has no effect on the direction of Molecular Partners i.e., Molecular Partners and Foghorn TherapeuticsInc go up and down completely randomly.

Pair Corralation between Molecular Partners and Foghorn TherapeuticsInc

Given the investment horizon of 90 days Molecular Partners AG is expected to generate 0.91 times more return on investment than Foghorn TherapeuticsInc. However, Molecular Partners AG is 1.09 times less risky than Foghorn TherapeuticsInc. It trades about -0.01 of its potential returns per unit of risk. Foghorn TherapeuticsInc is currently generating about -0.08 per unit of risk. If you would invest  390.00  in Molecular Partners AG on February 2, 2024 and sell it today you would lose (13.00) from holding Molecular Partners AG or give up 3.33% of portfolio value over 90 days.

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

Molecular Partners AG  vs.  Foghorn TherapeuticsInc

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 unfluctuating 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.

Foghorn TherapeuticsInc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Foghorn TherapeuticsInc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Foghorn TherapeuticsInc showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molecular Partners and Foghorn TherapeuticsInc

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

The idea behind Molecular Partners AG and Foghorn TherapeuticsInc 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.