Correlation Between Four Seasons and BioNTech

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

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

Diversification Opportunities for Four Seasons and BioNTech

0.02

Correlation Coefficient

Four Seasons  BioNTech

Significant diversification

The 3 months correlation between Four and BioNTech is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Four Seasons Education and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Four Seasons 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 Four Seasons Education 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 Four Seasons i.e., Four Seasons and BioNTech go up and down completely randomly.

Pair Corralation between Four Seasons and BioNTech

Given the investment horizon of 90 days Four Seasons Education is expected to generate 1.72 times more return on investment than BioNTech. However, Four Seasons is 1.72 times more volatile than BioNTech SE. It trades about 0.01 of its potential returns per unit of risk. BioNTech SE is currently generating about -0.03 per unit of risk. If you would invest  1,046  in Four Seasons Education on December 5, 2024 and sell it today you would lose (46.00) from holding Four Seasons Education or give up 4.4% of portfolio value over 90 days.

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

Four Seasons Education  vs.  BioNTech SE

Four Seasons Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Four Seasons Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Four Seasons is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Four Seasons and BioNTech

The main advantage of trading using opposite Four Seasons and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Four Seasons 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 Four Seasons Education 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.