Correlation Between BioNTech and CHINA HUARONG

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

By analyzing existing cross correlation between BioNTech SE and CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on BioNTech and CHINA HUARONG 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 CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and CHINA HUARONG.

Diversification Opportunities for BioNTech and CHINA HUARONG

-0.35

Correlation Coefficient

BioNTech  CHINA HUARONG

Very good diversification

The 3 months correlation between BioNTech and CHINA is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and CHINA HUARONG ENERHD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA HUARONG ENERHD 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 CHINA HUARONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA HUARONG ENERHD has no effect on the direction of BioNTech i.e., BioNTech and CHINA HUARONG go up and down completely randomly.

Pair Corralation between BioNTech and CHINA HUARONG

Assuming the 90 days trading horizon BioNTech SE is expected to under-perform the CHINA HUARONG. But the stock apears to be less risky and, when comparing its historical volatility, BioNTech SE is 13.88 times less risky than CHINA HUARONG. The stock trades about 0.0 of its potential returns per unit of risk. The CHINA HUARONG ENERHD 50 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.60  in CHINA HUARONG ENERHD 50 on October 7, 2024 and sell it today you would lose (0.45) from holding CHINA HUARONG ENERHD 50 or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BioNTech SE  vs.  CHINA HUARONG ENERHD 50

BioNTech SE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BioNTech is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CHINA HUARONG ENERHD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHINA HUARONG ENERHD 50 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BioNTech and CHINA HUARONG

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

The idea behind BioNTech SE and CHINA HUARONG ENERHD 50 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.