Correlation Between AJ Bell and BioNTech

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

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

Diversification Opportunities for AJ Bell and BioNTech

0.15

Correlation Coefficient

AJ Bell  BioNTech

Average diversification

The 3 months correlation between AJB and BioNTech is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding AJ Bell plc and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and AJ Bell 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 AJ Bell plc 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 has no effect on the direction of AJ Bell i.e., AJ Bell and BioNTech go up and down completely randomly.

Pair Corralation between AJ Bell and BioNTech

Assuming the 90 days trading horizon AJ Bell plc is expected to generate 0.65 times more return on investment than BioNTech. However, AJ Bell plc is 1.55 times less risky than BioNTech. It trades about 0.1 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.03 per unit of risk. If you would invest  28,834  in AJ Bell plc on October 7, 2024 and sell it today you would earn a total of  15,666  from holding AJ Bell plc or generate 54.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.81%
Values	Daily Returns

AJ Bell plc  vs.  BioNTech SE

AJ Bell plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AJ Bell plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, AJ Bell is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

BioNTech SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioNTech SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, BioNTech is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with AJ Bell and BioNTech

The main advantage of trading using opposite AJ Bell and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AJ Bell 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 AJ Bell plc and BioNTech SE 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.