Correlation Between Align Technology and BIONTECH

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

By analyzing existing cross correlation between Align Technology and BIONTECH SE DRN, you can compare the effects of market volatilities on Align Technology and BIONTECH 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 Align Technology with a short position of BIONTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and BIONTECH.

Diversification Opportunities for Align Technology and BIONTECH

0.61

Correlation Coefficient

Align Technology  BIONTECH

Poor diversification

The 3 months correlation between Align and BIONTECH is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and BIONTECH SE DRN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIONTECH SE DRN and Align Technology 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 Align Technology are associated (or correlated) with BIONTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIONTECH SE DRN has no effect on the direction of Align Technology i.e., Align Technology and BIONTECH go up and down completely randomly.

Pair Corralation between Align Technology and BIONTECH

Assuming the 90 days trading horizon Align Technology is expected to under-perform the BIONTECH. But the stock apears to be less risky and, when comparing its historical volatility, Align Technology is 1.72 times less risky than BIONTECH. The stock trades about -0.26 of its potential returns per unit of risk. The BIONTECH SE DRN is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  4,439  in BIONTECH SE DRN on December 2, 2024 and sell it today you would lose (339.00) from holding BIONTECH SE DRN or give up 7.64% of portfolio value over 90 days.

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

Align Technology  vs.  BIONTECH SE DRN

Align Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Align Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BIONTECH SE DRN

Risk-Adjusted Performance

Very Weak

Over the last 90 days BIONTECH SE DRN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BIONTECH is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Align Technology and BIONTECH

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

The idea behind Align Technology and BIONTECH SE DRN 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.