Correlation Between BioNTech and Mars Acquisition

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

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

Diversification Opportunities for BioNTech and Mars Acquisition

0.21

Correlation Coefficient

BioNTech  Mars Acquisition

Modest diversification

The 3 months correlation between BioNTech and Mars is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Mars Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mars Acquisition Corp 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 Mars Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mars Acquisition Corp has no effect on the direction of BioNTech i.e., BioNTech and Mars Acquisition go up and down completely randomly.

Pair Corralation between BioNTech and Mars Acquisition

Given the investment horizon of 90 days BioNTech is expected to generate 45.08 times less return on investment than Mars Acquisition. But when comparing it to its historical volatility, BioNTech SE is 3.02 times less risky than Mars Acquisition. It trades about 0.02 of its potential returns per unit of risk. Mars Acquisition Corp is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Mars Acquisition Corp on October 23, 2024 and sell it today you would earn a total of  18.00  from holding Mars Acquisition Corp or generate 90.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	48.33%
Values	Daily Returns

BioNTech SE  vs.  Mars Acquisition Corp

BioNTech SE

Risk-Adjusted Performance

1 of 100

Weak

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

Mars Acquisition Corp

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Mars Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Mars Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioNTech and Mars Acquisition

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

The idea behind BioNTech SE and Mars Acquisition Corp 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.