Correlation Between Ebro Foods and BioNTech

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

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

Diversification Opportunities for Ebro Foods and BioNTech

-0.26

Correlation Coefficient

Ebro Foods  BioNTech

Very good diversification

The 3 months correlation between Ebro and BioNTech is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Ebro Foods 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 Ebro Foods 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 Ebro Foods i.e., Ebro Foods and BioNTech go up and down completely randomly.

Pair Corralation between Ebro Foods and BioNTech

Assuming the 90 days trading horizon Ebro Foods is expected to generate 5.35 times less return on investment than BioNTech. But when comparing it to its historical volatility, Ebro Foods is 5.53 times less risky than BioNTech. It trades about 0.01 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ebro Foods  vs.  BioNTech SE

Ebro Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ebro Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ebro Foods is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Ebro Foods and BioNTech

The main advantage of trading using opposite Ebro Foods and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods 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 Ebro Foods 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.