Correlation Between BioNTech and Viemed Healthcare

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

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

Diversification Opportunities for BioNTech and Viemed Healthcare

0.03

Correlation Coefficient

BioNTech  Viemed Healthcare

Significant diversification

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

Pair Corralation between BioNTech and Viemed Healthcare

Given the investment horizon of 90 days BioNTech SE is expected to generate 1.7 times more return on investment than Viemed Healthcare. However, BioNTech is 1.7 times more volatile than Viemed Healthcare. It trades about -0.01 of its potential returns per unit of risk. Viemed Healthcare is currently generating about -0.08 per unit of risk. If you would invest  11,839  in BioNTech SE on November 29, 2024 and sell it today you would lose (439.00) from holding BioNTech SE or give up 3.71% of portfolio value over 90 days.

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

BioNTech SE  vs.  Viemed Healthcare

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Viemed Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viemed Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with BioNTech and Viemed Healthcare

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

The idea behind BioNTech SE and Viemed Healthcare 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.