Correlation Between BioNTech and YHC

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

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

Diversification Opportunities for BioNTech and YHC

-0.13

Correlation Coefficient

BioNTech  YHC

Good diversification

The 3 months correlation between BioNTech and YHC is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and YHC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YHC 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 YHC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YHC has no effect on the direction of BioNTech i.e., BioNTech and YHC go up and down completely randomly.

Pair Corralation between BioNTech and YHC

Given the investment horizon of 90 days BioNTech is expected to generate 11.17 times less return on investment than YHC. But when comparing it to its historical volatility, BioNTech SE is 3.67 times less risky than YHC. It trades about 0.08 of its potential returns per unit of risk. YHC is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  71.00  in YHC on October 7, 2024 and sell it today you would earn a total of  96.00  from holding YHC or generate 135.21% return on investment over 90 days.

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

BioNTech SE  vs.  YHC

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

YHC

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in YHC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, YHC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioNTech and YHC

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

The idea behind BioNTech SE and YHC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..