Correlation Between GMS and BioNTech

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

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

Diversification Opportunities for GMS and BioNTech

-0.28

Correlation Coefficient

GMS  BioNTech

Very good diversification

The 3 months correlation between GMS and BioNTech is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and GMS 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 GMS Inc 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 GMS i.e., GMS and BioNTech go up and down completely randomly.

Pair Corralation between GMS and BioNTech

Considering the 90-day investment horizon GMS Inc is expected to under-perform the BioNTech. But the stock apears to be less risky and, when comparing its historical volatility, GMS Inc is 1.45 times less risky than BioNTech. The stock trades about -0.52 of its potential returns per unit of risk. The BioNTech SE is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  12,076  in BioNTech SE on September 25, 2024 and sell it today you would lose (663.00) from holding BioNTech SE or give up 5.49% of portfolio value over 90 days.

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

GMS Inc  vs.  BioNTech SE

GMS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with GMS and BioNTech

The main advantage of trading using opposite GMS and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS 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 GMS Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.