Correlation Between BioNTech and Axsome Therapeutics

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Can any of the company-specific risk be diversified away by investing in both BioNTech and Axsome Therapeutics 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 Axsome Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioNTech SE and Axsome Therapeutics, you can compare the effects of market volatilities on BioNTech and Axsome Therapeutics 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 Axsome Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and Axsome Therapeutics.

Diversification Opportunities for BioNTech and Axsome Therapeutics

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between BioNTech and Axsome is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Axsome Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axsome Therapeutics 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 Axsome Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axsome Therapeutics has no effect on the direction of BioNTech i.e., BioNTech and Axsome Therapeutics go up and down completely randomly.

Pair Corralation between BioNTech and Axsome Therapeutics

Given the investment horizon of 90 days BioNTech SE is expected to generate 0.58 times more return on investment than Axsome Therapeutics. However, BioNTech SE is 1.72 times less risky than Axsome Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Axsome Therapeutics is currently generating about -0.06 per unit of risk. If you would invest  9,279  in BioNTech SE on December 29, 2023 and sell it today you would earn a total of  18.00  from holding BioNTech SE or generate 0.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BioNTech SE  vs.  Axsome Therapeutics

 Performance 
       Timeline  
BioNTech SE 

Risk-Adjusted Performance

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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.
Axsome Therapeutics 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Axsome Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Axsome Therapeutics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

BioNTech and Axsome Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BioNTech and Axsome Therapeutics

The main advantage of trading using opposite BioNTech and Axsome Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioNTech position performs unexpectedly, Axsome Therapeutics 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 Axsome Therapeutics will offset losses from the drop in Axsome Therapeutics' long position.
The idea behind BioNTech SE and Axsome Therapeutics 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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