Correlation Between Calliditas Therapeutics and Molecular Partners

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

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

Diversification Opportunities for Calliditas Therapeutics and Molecular Partners

0.4

Correlation Coefficient

Calliditas Therapeutics  Molecular Partners

Very weak diversification

The 3 months correlation between Calliditas and Molecular is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Calliditas Therapeutics and Molecular Partners AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molecular Partners and Calliditas 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 Calliditas Therapeutics are associated (or correlated) with Molecular Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molecular Partners has no effect on the direction of Calliditas Therapeutics i.e., Calliditas Therapeutics and Molecular Partners go up and down completely randomly.

Pair Corralation between Calliditas Therapeutics and Molecular Partners

Given the investment horizon of 90 days Calliditas Therapeutics is expected to under-perform the Molecular Partners. But the stock apears to be less risky and, when comparing its historical volatility, Calliditas Therapeutics is 1.2 times less risky than Molecular Partners. The stock trades about -0.07 of its potential returns per unit of risk. The Molecular Partners AG is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  416.00  in Molecular Partners AG on January 31, 2024 and sell it today you would lose (46.00) from holding Molecular Partners AG or give up 11.06% of portfolio value over 90 days.

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

Calliditas Therapeutics  vs.  Molecular Partners AG

Calliditas Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calliditas Therapeutics 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 comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Calliditas Therapeutics and Molecular Partners

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

The idea behind Calliditas Therapeutics and Molecular Partners AG 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.