Correlation Between BioNTech and NorAm Drilling

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

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

Diversification Opportunities for BioNTech and NorAm Drilling

0.05

Correlation Coefficient

BioNTech  NorAm Drilling

Significant diversification

The 3 months correlation between BioNTech and NorAm is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and NorAm Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorAm Drilling AS 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 NorAm Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorAm Drilling AS has no effect on the direction of BioNTech i.e., BioNTech and NorAm Drilling go up and down completely randomly.

Pair Corralation between BioNTech and NorAm Drilling

Assuming the 90 days trading horizon BioNTech SE is expected to generate 0.91 times more return on investment than NorAm Drilling. However, BioNTech SE is 1.1 times less risky than NorAm Drilling. It trades about 0.14 of its potential returns per unit of risk. NorAm Drilling AS is currently generating about -0.06 per unit of risk. If you would invest  11,280  in BioNTech SE on October 11, 2024 and sell it today you would earn a total of  710.00  from holding BioNTech SE or generate 6.29% 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.  NorAm Drilling AS

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.

NorAm Drilling AS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NorAm Drilling AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, NorAm Drilling unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioNTech and NorAm Drilling

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

The idea behind BioNTech SE and NorAm Drilling AS 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.