Correlation Between Krystal Biotech and Moderna

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

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

Diversification Opportunities for Krystal Biotech and Moderna

-0.39

Correlation Coefficient

Krystal Biotech  Moderna

Very good diversification

The 3 months correlation between Krystal and Moderna is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Krystal Biotech and Moderna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderna and Krystal Biotech 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 Krystal Biotech 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 Krystal Biotech i.e., Krystal Biotech and Moderna go up and down completely randomly.

Pair Corralation between Krystal Biotech and Moderna

Given the investment horizon of 90 days Krystal Biotech is expected to generate 0.5 times more return on investment than Moderna. However, Krystal Biotech is 2.0 times less risky than Moderna. It trades about 0.1 of its potential returns per unit of risk. Moderna is currently generating about -0.05 per unit of risk. If you would invest  15,980  in Krystal Biotech on December 29, 2024 and sell it today you would earn a total of  2,412  from holding Krystal Biotech or generate 15.09% return on investment over 90 days.

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

Krystal Biotech  vs.  Moderna

Krystal Biotech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Krystal Biotech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Krystal Biotech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Moderna

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Krystal Biotech and Moderna

The main advantage of trading using opposite Krystal Biotech and Moderna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krystal Biotech 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 Krystal Biotech 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.