Correlation Between Stardust Power and BioNTech

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

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

Diversification Opportunities for Stardust Power and BioNTech

0.05

Correlation Coefficient

Stardust Power  BioNTech

Significant diversification

The 3 months correlation between Stardust and BioNTech is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Stardust Power and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Stardust Power 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 Stardust Power 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 Stardust Power i.e., Stardust Power and BioNTech go up and down completely randomly.

Pair Corralation between Stardust Power and BioNTech

Assuming the 90 days horizon Stardust Power is expected to generate 5.6 times more return on investment than BioNTech. However, Stardust Power is 5.6 times more volatile than BioNTech SE. It trades about 0.07 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.04 per unit of risk. If you would invest  21.00  in Stardust Power on September 2, 2024 and sell it today you would earn a total of  1.00  from holding Stardust Power or generate 4.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	36.29%
Values	Daily Returns

Stardust Power  vs.  BioNTech SE

Stardust Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stardust Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Stardust Power is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated 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 Stardust Power and BioNTech

The main advantage of trading using opposite Stardust Power and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stardust Power 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 Stardust Power 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.