Correlation Between Ocean Biomedical and BioNTech

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

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

Diversification Opportunities for Ocean Biomedical and BioNTech

-0.05

Correlation Coefficient

Ocean Biomedical  BioNTech

Good diversification

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

Pair Corralation between Ocean Biomedical and BioNTech

Given the investment horizon of 90 days Ocean Biomedical is expected to under-perform the BioNTech. In addition to that, Ocean Biomedical is 3.12 times more volatile than BioNTech SE. It trades about -0.09 of its total potential returns per unit of risk. BioNTech SE is currently generating about 0.15 per unit of volatility. If you would invest  8,701  in BioNTech SE on March 12, 2024 and sell it today you would earn a total of  1,333  from holding BioNTech SE or generate 15.32% return on investment over 90 days.

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

Ocean Biomedical  vs.  BioNTech SE

Ocean Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocean Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

BioNTech SE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, BioNTech is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ocean Biomedical and BioNTech

The main advantage of trading using opposite Ocean Biomedical and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocean Biomedical 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 Ocean Biomedical 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.