Correlation Between Ikena Oncology and BioNTech

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

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

Diversification Opportunities for Ikena Oncology and BioNTech

0.18

Correlation Coefficient

Ikena Oncology  BioNTech

Average diversification

The 3 months correlation between Ikena and BioNTech is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ikena Oncology and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Ikena Oncology 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 Ikena Oncology 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 Ikena Oncology i.e., Ikena Oncology and BioNTech go up and down completely randomly.

Pair Corralation between Ikena Oncology and BioNTech

Given the investment horizon of 90 days Ikena Oncology is expected to generate 82.61 times less return on investment than BioNTech. But when comparing it to its historical volatility, Ikena Oncology is 3.18 times less risky than BioNTech. It trades about 0.01 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  8,800  in BioNTech SE on August 31, 2024 and sell it today you would earn a total of  3,272  from holding BioNTech SE or generate 37.18% return on investment over 90 days.

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

Ikena Oncology  vs.  BioNTech SE

Ikena Oncology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ikena Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ikena Oncology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BioNTech SE

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 11 (%) 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 Ikena Oncology and BioNTech

The main advantage of trading using opposite Ikena Oncology and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ikena Oncology 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 Ikena Oncology 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..