Correlation Between WuXi Biologics and Moderna

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

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

Diversification Opportunities for WuXi Biologics and Moderna

-0.03

Correlation Coefficient

WuXi Biologics  Moderna

Good diversification

The 3 months correlation between WuXi and Moderna is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding WuXi Biologics and Moderna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderna and WuXi Biologics 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 WuXi Biologics are associated (or correlated) with Moderna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderna has no effect on the direction of WuXi Biologics i.e., WuXi Biologics and Moderna go up and down completely randomly.

Pair Corralation between WuXi Biologics and Moderna

Assuming the 90 days horizon WuXi Biologics is expected to under-perform the Moderna. In addition to that, WuXi Biologics is 1.04 times more volatile than Moderna. It trades about -0.07 of its total potential returns per unit of risk. Moderna is currently generating about 0.01 per unit of volatility. If you would invest  10,426  in Moderna on January 17, 2024 and sell it today you would lose (40.00) from holding Moderna or give up 0.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

WuXi Biologics  vs.  Moderna

WuXi Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WuXi Biologics 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 basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Moderna

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Moderna are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Moderna may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with WuXi Biologics and Moderna

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

The idea behind WuXi Biologics and Moderna 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.