Correlation Between BioNTech and BKV

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

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

Diversification Opportunities for BioNTech and BKV

-0.01

Correlation Coefficient

BioNTech  BKV

Good diversification

The 3 months correlation between BioNTech and BKV is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and BKV Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKV Corporation 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 BKV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKV Corporation has no effect on the direction of BioNTech i.e., BioNTech and BKV go up and down completely randomly.

Pair Corralation between BioNTech and BKV

Given the investment horizon of 90 days BioNTech SE is expected to under-perform the BKV. In addition to that, BioNTech is 1.45 times more volatile than BKV Corporation. It trades about -0.01 of its total potential returns per unit of risk. BKV Corporation is currently generating about 0.19 per unit of volatility. If you would invest  1,829  in BKV Corporation on September 30, 2024 and sell it today you would earn a total of  424.00  from holding BKV Corporation or generate 23.18% return on investment over 90 days.

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

BioNTech SE  vs.  BKV Corp.

BioNTech SE

Risk-Adjusted Performance

0 of 100

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.

BKV Corporation

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioNTech and BKV

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

The idea behind BioNTech SE and BKV Corporation 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.