Correlation Between Biomm SA and BIONTECH

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

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

Diversification Opportunities for Biomm SA and BIONTECH

-0.62

Correlation Coefficient

Biomm SA  BIONTECH

Excellent diversification

The 3 months correlation between Biomm and BIONTECH is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Biomm SA 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 Biomm SA 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 Biomm SA 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 Biomm SA i.e., Biomm SA and BIONTECH go up and down completely randomly.

Pair Corralation between Biomm SA and BIONTECH

Assuming the 90 days trading horizon Biomm SA is expected to under-perform the BIONTECH. But the stock apears to be less risky and, when comparing its historical volatility, Biomm SA is 1.05 times less risky than BIONTECH. The stock trades about -0.22 of its potential returns per unit of risk. The BIONTECH SE DRN is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,840  in BIONTECH SE DRN on September 12, 2024 and sell it today you would earn a total of  620.00  from holding BIONTECH SE DRN or generate 16.15% return on investment over 90 days.

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

Biomm SA  vs.  BIONTECH SE DRN

Biomm SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biomm SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BIONTECH SE DRN

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BIONTECH SE DRN are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BIONTECH sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biomm SA and BIONTECH

The main advantage of trading using opposite Biomm SA and BIONTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biomm SA 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 Biomm SA 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.