Correlation Between BioNTech and UmweltBank

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

Diversification Opportunities for BioNTech and UmweltBank

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between BioNTech and UmweltBank is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and UmweltBank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UmweltBank AG and BioNTech 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 BioNTech SE are associated (or correlated) with UmweltBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UmweltBank AG has no effect on the direction of BioNTech i.e., BioNTech and UmweltBank go up and down completely randomly.

Pair Corralation between BioNTech and UmweltBank

Assuming the 90 days trading horizon BioNTech SE is expected to generate 1.11 times more return on investment than UmweltBank. However, BioNTech is 1.11 times more volatile than UmweltBank AG. It trades about 0.0 of its potential returns per unit of risk. UmweltBank AG is currently generating about -0.04 per unit of risk. If you would invest  13,495  in BioNTech SE on November 6, 2024 and sell it today you would lose (1,715) from holding BioNTech SE or give up 12.71% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

BioNTech SE  vs.  UmweltBank AG

 Performance 
       Timeline  
BioNTech SE 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, BioNTech exhibited solid returns over the last few months and may actually be approaching a breakup point.
UmweltBank AG 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in UmweltBank AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, UmweltBank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BioNTech and UmweltBank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BioNTech and UmweltBank

The main advantage of trading using opposite BioNTech and UmweltBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioNTech position performs unexpectedly, UmweltBank 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 UmweltBank will offset losses from the drop in UmweltBank's long position.
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The idea behind BioNTech SE and UmweltBank 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.
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.

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