Correlation Between Nel ASA and BioNTech

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

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

Diversification Opportunities for Nel ASA and BioNTech

-0.38

Correlation Coefficient

Nel ASA  BioNTech

Very good diversification

The 3 months correlation between Nel and BioNTech is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nel ASA and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Nel ASA 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 Nel ASA are associated (or correlated) with BioNTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioNTech SE has no effect on the direction of Nel ASA i.e., Nel ASA and BioNTech go up and down completely randomly.

Pair Corralation between Nel ASA and BioNTech

Assuming the 90 days horizon Nel ASA is expected to generate 3.19 times more return on investment than BioNTech. However, Nel ASA is 3.19 times more volatile than BioNTech SE. It trades about 0.03 of its potential returns per unit of risk. BioNTech SE is currently generating about -0.1 per unit of risk. If you would invest  24.00  in Nel ASA on December 29, 2024 and sell it today you would lose (2.00) from holding Nel ASA or give up 8.33% of portfolio value over 90 days.

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

Nel ASA  vs.  BioNTech SE

Nel ASA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nel ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nel ASA reported solid returns over the last few months and may actually be approaching a breakup point.

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nel ASA and BioNTech

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

The idea behind Nel ASA and BioNTech SE 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.