Correlation Between ZOZO and BioNTech
Can any of the company-specific risk be diversified away by investing in both ZOZO and BioNTech 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 ZOZO and BioNTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZOZO Inc and BioNTech SE, you can compare the effects of market volatilities on ZOZO and BioNTech 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 ZOZO with a short position of BioNTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZOZO and BioNTech.
Diversification Opportunities for ZOZO and BioNTech
Significant diversification
The 3 months correlation between ZOZO and BioNTech is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding ZOZO Inc and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and ZOZO 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 ZOZO Inc are associated (or correlated) with BioNTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioNTech SE has no effect on the direction of ZOZO i.e., ZOZO and BioNTech go up and down completely randomly.
Pair Corralation between ZOZO and BioNTech
Assuming the 90 days horizon ZOZO Inc is expected to under-perform the BioNTech. But the pink sheet apears to be less risky and, when comparing its historical volatility, ZOZO Inc is 12.26 times less risky than BioNTech. The pink sheet trades about -0.5 of its potential returns per unit of risk. The BioNTech SE is currently generating about 0.09 of returns per unit of risk over similar time horizon. 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 |
ZOZO Inc vs. BioNTech SE
Performance |
| Timeline |
| ZOZO Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| BioNTech SE |
ZOZO and BioNTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZOZO and BioNTech
The main advantage of trading using opposite ZOZO and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZOZO position performs unexpectedly, BioNTech 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 BioNTech will offset losses from the drop in BioNTech's long position.The idea behind ZOZO Inc and BioNTech SE 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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