Correlation Between BioNTech and BP PLC

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

By analyzing existing cross correlation between BioNTech SE and BP PLC DZ1, you can compare the effects of market volatilities on BioNTech and BP PLC 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 BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and BP PLC.

Diversification Opportunities for BioNTech and BP PLC

0.07

Correlation Coefficient

BioNTech  BP PLC

Significant diversification

The 3 months correlation between BioNTech and BPE is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and BP PLC DZ1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC DZ1 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 BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC DZ1 has no effect on the direction of BioNTech i.e., BioNTech and BP PLC go up and down completely randomly.

Pair Corralation between BioNTech and BP PLC

Assuming the 90 days trading horizon BioNTech SE is expected to under-perform the BP PLC. But the stock apears to be less risky and, when comparing its historical volatility, BioNTech SE is 1.05 times less risky than BP PLC. The stock trades about -0.14 of its potential returns per unit of risk. The BP PLC DZ1 is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  442.00  in BP PLC DZ1 on December 22, 2024 and sell it today you would earn a total of  82.00  from holding BP PLC DZ1 or generate 18.55% return on investment over 90 days.

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

BioNTech SE  vs.  BP PLC DZ1

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. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

BP PLC DZ1

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BP PLC DZ1 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BP PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioNTech and BP PLC

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

The idea behind BioNTech SE and BP PLC DZ1 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.