Correlation Between LINGYI ITECH and Moderna

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Can any of the company-specific risk be diversified away by investing in both LINGYI ITECH 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 LINGYI ITECH and Moderna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LINGYI ITECH GUAN and Moderna, you can compare the effects of market volatilities on LINGYI ITECH 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 LINGYI ITECH with a short position of Moderna. Check out your portfolio center. Please also check ongoing floating volatility patterns of LINGYI ITECH and Moderna.

Diversification Opportunities for LINGYI ITECH and Moderna

  Correlation Coefficient

Poor diversification

The 3 months correlation between LINGYI and Moderna is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding LINGYI ITECH GUAN and Moderna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderna and LINGYI ITECH 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 LINGYI ITECH GUAN 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 LINGYI ITECH i.e., LINGYI ITECH and Moderna go up and down completely randomly.

Pair Corralation between LINGYI ITECH and Moderna

Assuming the 90 days trading horizon LINGYI ITECH is expected to generate 1.58 times less return on investment than Moderna. But when comparing it to its historical volatility, LINGYI ITECH GUAN is 2.24 times less risky than Moderna. It trades about 0.19 of its potential returns per unit of risk. Moderna is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  14,000  in Moderna on April 7, 2022 and sell it today you would earn a total of  1,554  from holding Moderna or generate 11.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns


 Performance (%) 
LINGYI Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in LINGYI ITECH GUAN are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, LINGYI ITECH may actually be approaching a critical reversion point that can send shares even higher in August 2022.

LINGYI Price Channel

Moderna Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Moderna are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Moderna is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Moderna Price Channel

LINGYI ITECH and Moderna Volatility Contrast

 Predicted Return Density 

Pair Trading with LINGYI ITECH and Moderna

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


Pair trading matchups for LINGYI ITECH

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against LINGYI ITECH as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. LINGYI ITECH's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, LINGYI ITECH's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to LINGYI ITECH GUAN.
The idea behind LINGYI ITECH GUAN 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.


Pair trading matchups for Moderna

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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