Correlation Between BioNTech and Rafael Holdings

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

By analyzing existing cross correlation between BioNTech SE and Rafael Holdings Class, you can compare the effects of market volatilities on BioNTech and Rafael Holdings 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 Rafael Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and Rafael Holdings.

Diversification Opportunities for BioNTech and Rafael Holdings

0.05

Correlation Coefficient

BioNTech  Rafael Holdings

Significant diversification

The 3 months correlation between BioNTech and Rafael is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Rafael Holdings Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafael Holdings Class 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 Rafael Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafael Holdings Class has no effect on the direction of BioNTech i.e., BioNTech and Rafael Holdings go up and down completely randomly.

Pair Corralation between BioNTech and Rafael Holdings

Given the investment horizon of 90 days BioNTech SE is expected to under-perform the Rafael Holdings. But the stock apears to be less risky and, when comparing its historical volatility, BioNTech SE is 1.21 times less risky than Rafael Holdings. The stock trades about -0.04 of its potential returns per unit of risk. The Rafael Holdings Class is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  206.00  in Rafael Holdings Class on January 20, 2024 and sell it today you would lose (35.00) from holding Rafael Holdings Class or give up 16.99% of portfolio value over 90 days.

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

BioNTech SE  vs.  Rafael Holdings Class

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Rafael Holdings Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rafael Holdings Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Rafael Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with BioNTech and Rafael Holdings

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

The idea behind BioNTech SE and Rafael Holdings Class 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.