Correlation Between Moderna and A1LN34

Can any of the company-specific risk be diversified away by investing in both Moderna and A1LN34 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 Moderna and A1LN34 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Moderna and A1LN34, you can compare the effects of market volatilities on Moderna and A1LN34 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 Moderna with a short position of A1LN34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moderna and A1LN34.

Diversification Opportunities for Moderna and A1LN34

0.28

Correlation Coefficient

Moderna  A1LN34

Modest diversification

The 3 months correlation between Moderna and A1LN34 is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Moderna and A1LN34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1LN34 and Moderna 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 Moderna are associated (or correlated) with A1LN34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1LN34 has no effect on the direction of Moderna i.e., Moderna and A1LN34 go up and down completely randomly.

Pair Corralation between Moderna and A1LN34

Assuming the 90 days trading horizon Moderna is expected to under-perform the A1LN34. In addition to that, Moderna is 1.3 times more volatile than A1LN34. It trades about -0.15 of its total potential returns per unit of risk. A1LN34 is currently generating about 0.01 per unit of volatility. If you would invest  7,399  in A1LN34 on September 24, 2024 and sell it today you would lose (49.00) from holding A1LN34 or give up 0.66% of portfolio value over 90 days.

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

Moderna  vs.  A1LN34

Moderna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moderna 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 basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

A1LN34

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A1LN34 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, A1LN34 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Moderna and A1LN34

The main advantage of trading using opposite Moderna and A1LN34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moderna position performs unexpectedly, A1LN34 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 A1LN34 will offset losses from the drop in A1LN34's long position.

The idea behind Moderna and A1LN34 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.