Correlation Between Moderna and Molecular Pharmacology

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

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

Diversification Opportunities for Moderna and Molecular Pharmacology

0.79

Correlation Coefficient

Moderna  Molecular Pharmacology

Poor diversification

The 3 months correlation between Moderna and Molecular is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Moderna and Molecular Pharmacology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molecular Pharmacology 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 Molecular Pharmacology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molecular Pharmacology has no effect on the direction of Moderna i.e., Moderna and Molecular Pharmacology go up and down completely randomly.

Pair Corralation between Moderna and Molecular Pharmacology

Given the investment horizon of 90 days Moderna is expected to generate 0.31 times more return on investment than Molecular Pharmacology. However, Moderna is 3.2 times less risky than Molecular Pharmacology. It trades about -0.22 of its potential returns per unit of risk. Molecular Pharmacology is currently generating about -0.11 per unit of risk. If you would invest  7,294  in Moderna on September 2, 2024 and sell it today you would lose (2,988) from holding Moderna or give up 40.97% of portfolio value over 90 days.

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

Moderna  vs.  Molecular Pharmacology

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 unsteady 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.

Molecular Pharmacology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molecular Pharmacology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Moderna and Molecular Pharmacology

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

The idea behind Moderna and Molecular Pharmacology 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.