Correlation Between BioNTech and Altair Engineering

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

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

Diversification Opportunities for BioNTech and Altair Engineering

0.21

Correlation Coefficient

BioNTech  Altair Engineering

Modest diversification

The 3 months correlation between BioNTech and Altair is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and BioNTech 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 BioNTech SE are associated (or correlated) with Altair Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altair Engineering has no effect on the direction of BioNTech i.e., BioNTech and Altair Engineering go up and down completely randomly.

Pair Corralation between BioNTech and Altair Engineering

Given the investment horizon of 90 days BioNTech SE is expected to under-perform the Altair Engineering. In addition to that, BioNTech is 1.2 times more volatile than Altair Engineering. It trades about -0.03 of its total potential returns per unit of risk. Altair Engineering is currently generating about 0.05 per unit of volatility. If you would invest  5,601  in Altair Engineering on January 24, 2024 and sell it today you would earn a total of  2,621  from holding Altair Engineering or generate 46.8% return on investment over 90 days.

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

BioNTech SE  vs.  Altair Engineering

BioNTech SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioNTech SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Altair Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altair Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Altair Engineering is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with BioNTech and Altair Engineering

The main advantage of trading using opposite BioNTech and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioNTech position performs unexpectedly, Altair Engineering 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 Altair Engineering will offset losses from the drop in Altair Engineering's long position.

The idea behind BioNTech SE and Altair Engineering 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 Commodity Directory module to find actively traded commodities issued by global exchanges.