Correlation Between BioNTech and MEI Pharma

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

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

Diversification Opportunities for BioNTech and MEI Pharma

0.73

Correlation Coefficient

BioNTech  MEI Pharma

Poor diversification

The 3 months correlation between BioNTech and MEI is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and MEI Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEI Pharma 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 MEI Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEI Pharma has no effect on the direction of BioNTech i.e., BioNTech and MEI Pharma go up and down completely randomly.

Pair Corralation between BioNTech and MEI Pharma

Given the investment horizon of 90 days BioNTech SE is expected to under-perform the MEI Pharma. In addition to that, BioNTech is 1.64 times more volatile than MEI Pharma. It trades about -0.07 of its total potential returns per unit of risk. MEI Pharma is currently generating about -0.01 per unit of volatility. If you would invest  236.00  in MEI Pharma on December 21, 2024 and sell it today you would lose (5.00) from holding MEI Pharma or give up 2.12% of portfolio value over 90 days.

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

BioNTech SE  vs.  MEI Pharma

BioNTech SE

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

MEI Pharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days MEI Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, MEI Pharma is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with BioNTech and MEI Pharma

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

The idea behind BioNTech SE and MEI Pharma 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.