Correlation Between Moderna and Diamyd Medical

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

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

Diversification Opportunities for Moderna and Diamyd Medical

0.89

Correlation Coefficient

Moderna  Diamyd Medical

Very poor diversification

The 3 months correlation between Moderna and Diamyd is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Moderna and Diamyd Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamyd Medical AB 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 Diamyd Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamyd Medical AB has no effect on the direction of Moderna i.e., Moderna and Diamyd Medical go up and down completely randomly.

Pair Corralation between Moderna and Diamyd Medical

Assuming the 90 days horizon Moderna is expected to under-perform the Diamyd Medical. But the stock apears to be less risky and, when comparing its historical volatility, Moderna is 1.07 times less risky than Diamyd Medical. The stock trades about -0.21 of its potential returns per unit of risk. The Diamyd Medical AB is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  133.00  in Diamyd Medical AB on September 3, 2024 and sell it today you would lose (21.00) from holding Diamyd Medical AB or give up 15.79% of portfolio value over 90 days.

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

Moderna  vs.  Diamyd Medical AB

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.

Diamyd Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamyd Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Moderna and Diamyd Medical

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

The idea behind Moderna and Diamyd Medical AB 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.