Correlation Between BioNTech and CompuGroup Medical

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

By analyzing existing cross correlation between BioNTech SE and CompuGroup Medical AG, you can compare the effects of market volatilities on BioNTech and CompuGroup Medical 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 CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and CompuGroup Medical.

Diversification Opportunities for BioNTech and CompuGroup Medical

0.07

Correlation Coefficient

BioNTech  CompuGroup Medical

Significant diversification

The 3 months correlation between BioNTech and CompuGroup is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and CompuGroup Medical AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical 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 CompuGroup Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompuGroup Medical has no effect on the direction of BioNTech i.e., BioNTech and CompuGroup Medical go up and down completely randomly.

Pair Corralation between BioNTech and CompuGroup Medical

Assuming the 90 days trading horizon BioNTech SE is expected to under-perform the CompuGroup Medical. But the stock apears to be less risky and, when comparing its historical volatility, BioNTech SE is 8.27 times less risky than CompuGroup Medical. The stock trades about -0.05 of its potential returns per unit of risk. The CompuGroup Medical AG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,176  in CompuGroup Medical AG on December 26, 2024 and sell it today you would lose (554.00) from holding CompuGroup Medical AG or give up 25.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

BioNTech SE  vs.  CompuGroup Medical AG

BioNTech SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days BioNTech SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

CompuGroup Medical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CompuGroup Medical AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CompuGroup Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioNTech and CompuGroup Medical

The main advantage of trading using opposite BioNTech and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioNTech position performs unexpectedly, CompuGroup Medical 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 CompuGroup Medical will offset losses from the drop in CompuGroup Medical's long position.

The idea behind BioNTech SE and CompuGroup Medical 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.