Correlation Between BioNTech and Four Seasons

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

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

Diversification Opportunities for BioNTech and Four Seasons

0.03

Correlation Coefficient

BioNTech  Four Seasons

Significant diversification

The 3 months correlation between BioNTech and Four is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Four Seasons Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Seasons Education 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 Four Seasons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Seasons Education has no effect on the direction of BioNTech i.e., BioNTech and Four Seasons go up and down completely randomly.

Pair Corralation between BioNTech and Four Seasons

Given the investment horizon of 90 days BioNTech SE is expected to generate 1.26 times more return on investment than Four Seasons. However, BioNTech is 1.26 times more volatile than Four Seasons Education. It trades about 0.29 of its potential returns per unit of risk. Four Seasons Education is currently generating about 0.07 per unit of risk. If you would invest  10,187  in BioNTech SE on September 17, 2024 and sell it today you would earn a total of  1,851  from holding BioNTech SE or generate 18.17% return on investment over 90 days.

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

BioNTech SE  vs.  Four Seasons Education

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. In spite of fairly strong basic indicators, BioNTech is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Four Seasons Education

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Four Seasons Education are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Four Seasons unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioNTech and Four Seasons

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

The idea behind BioNTech SE and Four Seasons Education 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.