Correlation Between BioNTech and Cumberland Pharmaceuticals

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

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

Diversification Opportunities for BioNTech and Cumberland Pharmaceuticals

-0.24

Correlation Coefficient

BioNTech  Cumberland Pharmaceuticals

Very good diversification

The 3 months correlation between BioNTech and Cumberland is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of BioNTech i.e., BioNTech and Cumberland Pharmaceuticals go up and down completely randomly.

Pair Corralation between BioNTech and Cumberland Pharmaceuticals

Given the investment horizon of 90 days BioNTech SE is expected to generate 0.98 times more return on investment than Cumberland Pharmaceuticals. However, BioNTech SE is 1.02 times less risky than Cumberland Pharmaceuticals. It trades about 0.15 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about 0.02 per unit of risk. If you would invest  8,800  in BioNTech SE on August 31, 2024 and sell it today you would earn a total of  3,272  from holding BioNTech SE or generate 37.18% return on investment over 90 days.

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

BioNTech SE  vs.  Cumberland Pharmaceuticals

BioNTech SE

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, BioNTech showed solid returns over the last few months and may actually be approaching a breakup point.

Cumberland Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cumberland Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Cumberland Pharmaceuticals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BioNTech and Cumberland Pharmaceuticals

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

The idea behind BioNTech SE and Cumberland Pharmaceuticals 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.