Correlation Between BioNTech and GreenX Metals

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

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

Diversification Opportunities for BioNTech and GreenX Metals

-0.22

Correlation Coefficient

BioNTech  GreenX Metals

Very good diversification

The 3 months correlation between BioNTech and GreenX is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and GreenX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenX Metals 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 GreenX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenX Metals has no effect on the direction of BioNTech i.e., BioNTech and GreenX Metals go up and down completely randomly.

Pair Corralation between BioNTech and GreenX Metals

Assuming the 90 days trading horizon BioNTech SE is expected to generate 0.9 times more return on investment than GreenX Metals. However, BioNTech SE is 1.11 times less risky than GreenX Metals. It trades about -0.01 of its potential returns per unit of risk. GreenX Metals is currently generating about -0.01 per unit of risk. If you would invest  14,455  in BioNTech SE on September 26, 2024 and sell it today you would lose (3,555) from holding BioNTech SE or give up 24.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.81%
Values	Daily Returns

BioNTech SE  vs.  GreenX Metals

BioNTech SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioNTech SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, BioNTech is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

GreenX Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GreenX Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, GreenX Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BioNTech and GreenX Metals

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

The idea behind BioNTech SE and GreenX Metals 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.