Correlation Between ADC Therapeutics and 4D Molecular

Can any of the company-specific risk be diversified away by investing in both ADC Therapeutics and 4D Molecular 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 ADC Therapeutics and 4D Molecular into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ADC Therapeutics SA and 4D Molecular Therapeutics, you can compare the effects of market volatilities on ADC Therapeutics and 4D Molecular 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 ADC Therapeutics with a short position of 4D Molecular. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADC Therapeutics and 4D Molecular.

Diversification Opportunities for ADC Therapeutics and 4D Molecular

0.89

Correlation Coefficient

ADC Therapeutics  4D Molecular

Very poor diversification

The 3 months correlation between ADC and FDMT is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ADC Therapeutics SA and 4D Molecular Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4D Molecular Therapeutics and ADC Therapeutics 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 ADC Therapeutics SA are associated (or correlated) with 4D Molecular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4D Molecular Therapeutics has no effect on the direction of ADC Therapeutics i.e., ADC Therapeutics and 4D Molecular go up and down completely randomly.

Pair Corralation between ADC Therapeutics and 4D Molecular

Given the investment horizon of 90 days ADC Therapeutics is expected to generate 1.59 times less return on investment than 4D Molecular. But when comparing it to its historical volatility, ADC Therapeutics SA is 1.38 times less risky than 4D Molecular. It trades about 0.18 of its potential returns per unit of risk. 4D Molecular Therapeutics is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  563.00  in 4D Molecular Therapeutics on August 8, 2025 and sell it today you would earn a total of  488.00  from holding 4D Molecular Therapeutics or generate 86.68% return on investment over 90 days.

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

ADC Therapeutics SA  vs.  4D Molecular Therapeutics

ADC Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ADC Therapeutics SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, ADC Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

4D Molecular Therapeutics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 4D Molecular Therapeutics are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, 4D Molecular unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADC Therapeutics and 4D Molecular

The main advantage of trading using opposite ADC Therapeutics and 4D Molecular positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADC Therapeutics position performs unexpectedly, 4D Molecular 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 4D Molecular will offset losses from the drop in 4D Molecular's long position.

The idea behind ADC Therapeutics SA and 4D Molecular Therapeutics 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.