Correlation Between Royalty Management and BioNTech

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

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

Diversification Opportunities for Royalty Management and BioNTech

0.12

Correlation Coefficient

Royalty Management  BioNTech

Average diversification

The 3 months correlation between Royalty and BioNTech is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Royalty Management Holding and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Royalty Management 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 Royalty Management Holding 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 Royalty Management i.e., Royalty Management and BioNTech go up and down completely randomly.

Pair Corralation between Royalty Management and BioNTech

Given the investment horizon of 90 days Royalty Management Holding is expected to under-perform the BioNTech. But the stock apears to be less risky and, when comparing its historical volatility, Royalty Management Holding is 1.3 times less risky than BioNTech. The stock trades about -0.32 of its potential returns per unit of risk. The BioNTech SE is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  11,982  in BioNTech SE on December 5, 2024 and sell it today you would lose (1,017) from holding BioNTech SE or give up 8.49% of portfolio value over 90 days.

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

Royalty Management Holding  vs.  BioNTech SE

Royalty Management

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Royalty Management Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Royalty Management is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the 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 Royalty Management and BioNTech

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

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.