Correlation Between BIONTECH and Porto Seguro

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

By analyzing existing cross correlation between BIONTECH SE DRN and Porto Seguro SA, you can compare the effects of market volatilities on BIONTECH and Porto Seguro 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 Porto Seguro. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIONTECH and Porto Seguro.

Diversification Opportunities for BIONTECH and Porto Seguro

0.38

Correlation Coefficient

BIONTECH  Porto Seguro

Weak diversification

The 3 months correlation between BIONTECH and Porto is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding BIONTECH SE DRN and Porto Seguro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porto Seguro SA 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 DRN are associated (or correlated) with Porto Seguro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porto Seguro SA has no effect on the direction of BIONTECH i.e., BIONTECH and Porto Seguro go up and down completely randomly.

Pair Corralation between BIONTECH and Porto Seguro

Assuming the 90 days trading horizon BIONTECH SE DRN is expected to generate 1.68 times more return on investment than Porto Seguro. However, BIONTECH is 1.68 times more volatile than Porto Seguro SA. It trades about 0.05 of its potential returns per unit of risk. Porto Seguro SA is currently generating about -0.14 per unit of risk. If you would invest  4,300  in BIONTECH SE DRN on September 27, 2024 and sell it today you would earn a total of  88.00  from holding BIONTECH SE DRN or generate 2.05% return on investment over 90 days.

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

BIONTECH SE DRN  vs.  Porto Seguro SA

BIONTECH SE DRN

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BIONTECH SE DRN are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BIONTECH may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Porto Seguro SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Porto Seguro SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Porto Seguro is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BIONTECH and Porto Seguro

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

The idea behind BIONTECH SE DRN and Porto Seguro SA 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.