Correlation Between BioNTech and Auto Trader

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

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

Diversification Opportunities for BioNTech and Auto Trader

0.36

Correlation Coefficient

BioNTech  Auto Trader

Weak diversification

The 3 months correlation between BioNTech and Auto is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group and BioNTech 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 BioNTech SE are associated (or correlated) with Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of BioNTech i.e., BioNTech and Auto Trader go up and down completely randomly.

Pair Corralation between BioNTech and Auto Trader

Assuming the 90 days trading horizon BioNTech SE is expected to generate 2.37 times more return on investment than Auto Trader. However, BioNTech is 2.37 times more volatile than Auto Trader Group. It trades about 0.01 of its potential returns per unit of risk. Auto Trader Group is currently generating about -0.13 per unit of risk. If you would invest  11,300  in BioNTech SE on September 23, 2024 and sell it today you would lose (10.00) from holding BioNTech SE or give up 0.09% of portfolio value over 90 days.

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

BioNTech SE  vs.  Auto Trader Group

BioNTech SE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, BioNTech is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Auto Trader Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Auto Trader Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BioNTech and Auto Trader

The main advantage of trading using opposite BioNTech and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioNTech position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.

The idea behind BioNTech SE and Auto Trader Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..