Correlation Between Moderna and BeiGene

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

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

Diversification Opportunities for Moderna and BeiGene

0.34

Correlation Coefficient

Moderna  BeiGene

Weak diversification

The 3 months correlation between Moderna and BeiGene is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Moderna and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene 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 BeiGene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BeiGene has no effect on the direction of Moderna i.e., Moderna and BeiGene go up and down completely randomly.

Pair Corralation between Moderna and BeiGene

Assuming the 90 days trading horizon Moderna is expected to generate 1.03 times more return on investment than BeiGene. However, Moderna is 1.03 times more volatile than BeiGene. It trades about -0.04 of its potential returns per unit of risk. BeiGene is currently generating about -0.08 per unit of risk. If you would invest  1,257  in Moderna on September 24, 2024 and sell it today you would lose (52.00) from holding Moderna or give up 4.14% 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.  BeiGene

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.

BeiGene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BeiGene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, BeiGene 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 BeiGene

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

The idea behind Moderna and BeiGene 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.