Correlation Between Molecular Partners and Olema Pharmaceuticals

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

Diversification Opportunities for Molecular Partners and Olema Pharmaceuticals

0.55

Correlation Coefficient

Molecular Partners  Olema Pharmaceuticals

Very weak diversification

The 3 months correlation between Molecular and Olema is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Molecular Partners AG and Olema Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olema Pharmaceuticals 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 Olema Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olema Pharmaceuticals has no effect on the direction of Molecular Partners i.e., Molecular Partners and Olema Pharmaceuticals go up and down completely randomly.

Pair Corralation between Molecular Partners and Olema Pharmaceuticals

Given the investment horizon of 90 days Molecular Partners is expected to generate 5.38 times less return on investment than Olema Pharmaceuticals. But when comparing it to its historical volatility, Molecular Partners AG is 1.05 times less risky than Olema Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. Olema Pharmaceuticals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  376.00  in Olema Pharmaceuticals on July 21, 2024 and sell it today you would earn a total of  867.00  from holding Olema Pharmaceuticals or generate 230.59% return on investment over 90 days.

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

Molecular Partners AG  vs.  Olema Pharmaceuticals

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

Olema Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Olema Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Molecular Partners and Olema Pharmaceuticals

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

The idea behind Molecular Partners AG and Olema Pharmaceuticals 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.