Correlation Between Day One and BioNTech

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

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

Diversification Opportunities for Day One and BioNTech

-0.27

Correlation Coefficient

Day One  BioNTech

Very good diversification

The 3 months correlation between Day and BioNTech is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Day One Biopharmaceuticals and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Day One 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 Day One Biopharmaceuticals 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 Day One i.e., Day One and BioNTech go up and down completely randomly.

Pair Corralation between Day One and BioNTech

Given the investment horizon of 90 days Day One Biopharmaceuticals is expected to under-perform the BioNTech. But the stock apears to be less risky and, when comparing its historical volatility, Day One Biopharmaceuticals is 1.13 times less risky than BioNTech. The stock trades about -0.04 of its potential returns per unit of risk. The BioNTech SE is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  12,340  in BioNTech SE on September 13, 2024 and sell it today you would lose (406.00) from holding BioNTech SE or give up 3.29% of portfolio value over 90 days.

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

Day One Biopharmaceuticals  vs.  BioNTech SE

Day One Biopharmaceu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Day One Biopharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Day One is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

BioNTech SE

Risk-Adjusted Performance

0 of 100

Modest

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Day One and BioNTech

The main advantage of trading using opposite Day One and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Day One 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 Day One Biopharmaceuticals 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.