Correlation Between Neogen and BioNTech

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

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

Diversification Opportunities for Neogen and BioNTech

-0.18

Correlation Coefficient

Neogen  BioNTech

Good diversification

The 3 months correlation between Neogen and BioNTech is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Neogen and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Neogen 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 Neogen 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 Neogen i.e., Neogen and BioNTech go up and down completely randomly.

Pair Corralation between Neogen and BioNTech

Given the investment horizon of 90 days Neogen is expected to under-perform the BioNTech. But the stock apears to be less risky and, when comparing its historical volatility, Neogen is 1.35 times less risky than BioNTech. The stock trades about -0.07 of its potential returns per unit of risk. The BioNTech SE is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  8,902  in BioNTech SE on September 4, 2024 and sell it today you would earn a total of  2,818  from holding BioNTech SE or generate 31.66% return on investment over 90 days.

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

Neogen  vs.  BioNTech SE

Neogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BioNTech SE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BioNTech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neogen and BioNTech

The main advantage of trading using opposite Neogen and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neogen 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 Neogen 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.