Correlation Between BIONTECH and Baidu

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

By analyzing existing cross correlation between BIONTECH SE DRN and Baidu Inc, you can compare the effects of market volatilities on BIONTECH and Baidu 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 Baidu. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIONTECH and Baidu.

Diversification Opportunities for BIONTECH and Baidu

0.44

Correlation Coefficient

BIONTECH  Baidu

Very weak diversification

The 3 months correlation between BIONTECH and Baidu is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BIONTECH SE DRN and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc 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 DRN are associated (or correlated) with Baidu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baidu Inc has no effect on the direction of BIONTECH i.e., BIONTECH and Baidu go up and down completely randomly.

Pair Corralation between BIONTECH and Baidu

Assuming the 90 days trading horizon BIONTECH SE DRN is expected to generate 1.3 times more return on investment than Baidu. However, BIONTECH is 1.3 times more volatile than Baidu Inc. It trades about 0.16 of its potential returns per unit of risk. Baidu Inc is currently generating about 0.08 per unit of risk. If you would invest  3,133  in BIONTECH SE DRN on September 5, 2024 and sell it today you would earn a total of  1,262  from holding BIONTECH SE DRN or generate 40.28% return on investment over 90 days.

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

BIONTECH SE DRN  vs.  Baidu Inc

BIONTECH SE DRN

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BIONTECH SE DRN are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BIONTECH sustained solid returns over the last few months and may actually be approaching a breakup point.

Baidu Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Baidu Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Baidu sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BIONTECH and Baidu

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

The idea behind BIONTECH SE DRN and Baidu Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.