Correlation Between Enersys and BioNTech

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

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

Diversification Opportunities for Enersys and BioNTech

0.28

Correlation Coefficient

Enersys  BioNTech

Modest diversification

The 3 months correlation between Enersys and BioNTech is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Enersys and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Enersys 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 Enersys 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 Enersys i.e., Enersys and BioNTech go up and down completely randomly.

Pair Corralation between Enersys and BioNTech

Considering the 90-day investment horizon Enersys is expected to under-perform the BioNTech. But the stock apears to be less risky and, when comparing its historical volatility, Enersys is 2.19 times less risky than BioNTech. The stock trades about -0.01 of its potential returns per unit of risk. The BioNTech SE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10,500  in BioNTech SE on September 12, 2024 and sell it today you would earn a total of  1,360  from holding BioNTech SE or generate 12.96% return on investment over 90 days.

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

Enersys  vs.  BioNTech SE

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Enersys 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

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, BioNTech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enersys and BioNTech

The main advantage of trading using opposite Enersys and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enersys 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 Enersys 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.