Correlation Between BioNTech and Union Electric

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

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

Diversification Opportunities for BioNTech and Union Electric

-0.17

Correlation Coefficient

BioNTech  Union Electric

Good diversification

The 3 months correlation between BioNTech and Union is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Union Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Electric 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 Union Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Electric has no effect on the direction of BioNTech i.e., BioNTech and Union Electric go up and down completely randomly.

Pair Corralation between BioNTech and Union Electric

Given the investment horizon of 90 days BioNTech SE is expected to generate 1.02 times more return on investment than Union Electric. However, BioNTech is 1.02 times more volatile than Union Electric. It trades about 0.0 of its potential returns per unit of risk. Union Electric is currently generating about -0.03 per unit of risk. If you would invest  11,720  in BioNTech SE on December 2, 2024 and sell it today you would lose (428.00) from holding BioNTech SE or give up 3.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.21%
Values	Daily Returns

BioNTech SE  vs.  Union Electric

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 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.

Union Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Union Electric has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Union Electric is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BioNTech and Union Electric

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

The idea behind BioNTech SE and Union Electric 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.