Correlation Between BioNTech and MEITUAN UNSPADR/2B

Can any of the company-specific risk be diversified away by investing in both BioNTech and MEITUAN UNSPADR/2B 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 MEITUAN UNSPADR/2B into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BioNTech SE and MEITUAN UNSPADR2B, you can compare the effects of market volatilities on BioNTech and MEITUAN UNSPADR/2B 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 MEITUAN UNSPADR/2B. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and MEITUAN UNSPADR/2B.

Diversification Opportunities for BioNTech and MEITUAN UNSPADR/2B

-0.36

Correlation Coefficient

BioNTech  MEITUAN UNSPADR/2B

Very good diversification

The 3 months correlation between BioNTech and MEITUAN is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and MEITUAN UNSPADR2B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEITUAN UNSPADR/2B 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 MEITUAN UNSPADR/2B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEITUAN UNSPADR/2B has no effect on the direction of BioNTech i.e., BioNTech and MEITUAN UNSPADR/2B go up and down completely randomly.

Pair Corralation between BioNTech and MEITUAN UNSPADR/2B

Assuming the 90 days trading horizon BioNTech is expected to generate 3.54 times less return on investment than MEITUAN UNSPADR/2B. But when comparing it to its historical volatility, BioNTech SE is 1.48 times less risky than MEITUAN UNSPADR/2B. It trades about 0.01 of its potential returns per unit of risk. MEITUAN UNSPADR2B is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,920  in MEITUAN UNSPADR2B on October 11, 2024 and sell it today you would lose (340.00) from holding MEITUAN UNSPADR2B or give up 8.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

BioNTech SE  vs.  MEITUAN UNSPADR2B

BioNTech SE

Risk-Adjusted Performance

5 of 100

Modest

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

MEITUAN UNSPADR/2B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEITUAN UNSPADR2B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental 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 MEITUAN UNSPADR/2B

The main advantage of trading using opposite BioNTech and MEITUAN UNSPADR/2B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioNTech position performs unexpectedly, MEITUAN UNSPADR/2B 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 MEITUAN UNSPADR/2B will offset losses from the drop in MEITUAN UNSPADR/2B's long position.

The idea behind BioNTech SE and MEITUAN UNSPADR2B 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.