Correlation Between Knife River and BioNTech

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

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

Diversification Opportunities for Knife River and BioNTech

-0.09

Correlation Coefficient

Knife River  BioNTech

Good diversification

The 3 months correlation between Knife and BioNTech is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Knife River 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 Knife River 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 Knife River i.e., Knife River and BioNTech go up and down completely randomly.

Pair Corralation between Knife River and BioNTech

Considering the 90-day investment horizon Knife River is expected to generate 0.79 times more return on investment than BioNTech. However, Knife River is 1.27 times less risky than BioNTech. It trades about 0.14 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.1 per unit of risk. If you would invest  7,014  in Knife River on September 26, 2024 and sell it today you would earn a total of  3,342  from holding Knife River or generate 47.65% return on investment over 90 days.

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

Knife River  vs.  BioNTech SE

Knife River

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knife River are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Knife River reported solid returns over the last few months and may actually be approaching a breakup point.

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 Knife River and BioNTech

The main advantage of trading using opposite Knife River and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River 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 Knife River 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.