Correlation Between Moderna and CITIUS PHARMAC

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

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

Diversification Opportunities for Moderna and CITIUS PHARMAC

0.8

Correlation Coefficient

Moderna  CITIUS PHARMAC

Very poor diversification

The 3 months correlation between Moderna and CITIUS is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Moderna and CITIUS PHARMAC DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIUS PHARMAC DL 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 CITIUS PHARMAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIUS PHARMAC DL has no effect on the direction of Moderna i.e., Moderna and CITIUS PHARMAC go up and down completely randomly.

Pair Corralation between Moderna and CITIUS PHARMAC

Assuming the 90 days horizon Moderna is expected to generate 0.41 times more return on investment than CITIUS PHARMAC. However, Moderna is 2.42 times less risky than CITIUS PHARMAC. It trades about -0.2 of its potential returns per unit of risk. CITIUS PHARMAC DL is currently generating about -0.2 per unit of risk. If you would invest  6,217  in Moderna on September 15, 2024 and sell it today you would lose (2,246) from holding Moderna or give up 36.13% of portfolio value over 90 days.

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

Moderna  vs.  CITIUS PHARMAC DL

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CITIUS PHARMAC DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIUS PHARMAC DL 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 nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Moderna and CITIUS PHARMAC

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

The idea behind Moderna and CITIUS PHARMAC DL 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.