Correlation Between Moderna and BB Biotech

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

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

Diversification Opportunities for Moderna and BB Biotech

-0.28

Correlation Coefficient

Moderna  BB Biotech

Very good diversification

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

Pair Corralation between Moderna and BB Biotech

Assuming the 90 days horizon Moderna is expected to under-perform the BB Biotech. In addition to that, Moderna is 2.28 times more volatile than BB Biotech AG. It trades about -0.21 of its total potential returns per unit of risk. BB Biotech AG is currently generating about -0.03 per unit of volatility. If you would invest  3,880  in BB Biotech AG on September 28, 2024 and sell it today you would lose (125.00) from holding BB Biotech AG or give up 3.22% of portfolio value over 90 days.

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

Moderna  vs.  BB Biotech AG

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.

BB Biotech AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BB Biotech AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BB Biotech is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Moderna and BB Biotech

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

The idea behind Moderna and BB Biotech AG 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.