Correlation Between Coupang LLC and BioNTech

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

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

Diversification Opportunities for Coupang LLC and BioNTech

0.61

Correlation Coefficient

Coupang LLC  BioNTech

Poor diversification

The 3 months correlation between Coupang and BioNTech is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Coupang LLC 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 Coupang LLC 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 Coupang LLC i.e., Coupang LLC and BioNTech go up and down completely randomly.

Pair Corralation between Coupang LLC and BioNTech

Given the investment horizon of 90 days Coupang LLC is expected to generate 6.75 times less return on investment than BioNTech. But when comparing it to its historical volatility, Coupang LLC is 1.58 times less risky than BioNTech. It trades about 0.03 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  9,015  in BioNTech SE on September 5, 2024 and sell it today you would earn a total of  2,544  from holding BioNTech SE or generate 28.22% return on investment over 90 days.

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

Coupang LLC  vs.  BioNTech SE

Coupang LLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coupang LLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Coupang LLC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

BioNTech SE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BioNTech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coupang LLC and BioNTech

The main advantage of trading using opposite Coupang LLC and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coupang LLC 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 Coupang LLC 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.