Correlation Between BioNTech and ZOZO
Can any of the company-specific risk be diversified away by investing in both BioNTech and ZOZO 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 ZOZO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioNTech SE and ZOZO Inc, you can compare the effects of market volatilities on BioNTech and ZOZO 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 ZOZO. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and ZOZO.
Diversification Opportunities for BioNTech and ZOZO
Significant diversification
The 3 months correlation between BioNTech and ZOZO is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and ZOZO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZOZO Inc 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 ZOZO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZOZO Inc has no effect on the direction of BioNTech i.e., BioNTech and ZOZO go up and down completely randomly.
Pair Corralation between BioNTech and ZOZO
Given the investment horizon of 90 days BioNTech SE is expected to generate 12.26 times more return on investment than ZOZO. However, BioNTech is 12.26 times more volatile than ZOZO Inc. It trades about 0.09 of its potential returns per unit of risk. ZOZO Inc is currently generating about -0.5 per unit of risk. If you would invest 11,401 in BioNTech SE on August 30, 2024 and sell it today you would earn a total of 671.00 from holding BioNTech SE or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 18.18% |
| Values | Daily Returns |
BioNTech SE vs. ZOZO Inc
Performance |
| Timeline |
| BioNTech SE |
| ZOZO Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
BioNTech and ZOZO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioNTech and ZOZO
The main advantage of trading using opposite BioNTech and ZOZO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioNTech position performs unexpectedly, ZOZO 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 ZOZO will offset losses from the drop in ZOZO's long position.The idea behind BioNTech SE and ZOZO Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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