Correlation Between Procter Gamble and BIONTECH

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

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

Diversification Opportunities for Procter Gamble and BIONTECH

0.57

Correlation Coefficient

Procter Gamble  BIONTECH

Very weak diversification

The 3 months correlation between Procter and BIONTECH is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and BIONTECH SE DRN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIONTECH SE DRN and Procter Gamble 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 The Procter Gamble 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 DRN has no effect on the direction of Procter Gamble i.e., Procter Gamble and BIONTECH go up and down completely randomly.

Pair Corralation between Procter Gamble and BIONTECH

Assuming the 90 days trading horizon Procter Gamble is expected to generate 1.45 times less return on investment than BIONTECH. But when comparing it to its historical volatility, The Procter Gamble is 2.02 times less risky than BIONTECH. It trades about 0.07 of its potential returns per unit of risk. BIONTECH SE DRN is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,250  in BIONTECH SE DRN on September 13, 2024 and sell it today you would earn a total of  278.00  from holding BIONTECH SE DRN or generate 6.54% return on investment over 90 days.

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

The Procter Gamble  vs.  BIONTECH SE DRN

Procter Gamble

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Procter Gamble are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Procter Gamble is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BIONTECH SE DRN

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BIONTECH SE DRN are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BIONTECH may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Procter Gamble and BIONTECH

The main advantage of trading using opposite Procter Gamble and BIONTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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 The Procter Gamble and BIONTECH SE DRN 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.