Correlation Between BioNTech and Cassava Sciences

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

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

Diversification Opportunities for BioNTech and Cassava Sciences

0.41

Correlation Coefficient

BioNTech  Cassava Sciences

Very weak diversification

The 3 months correlation between BioNTech and Cassava is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Cassava Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cassava Sciences 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 Cassava Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cassava Sciences has no effect on the direction of BioNTech i.e., BioNTech and Cassava Sciences go up and down completely randomly.

Pair Corralation between BioNTech and Cassava Sciences

Given the investment horizon of 90 days BioNTech SE is expected to under-perform the Cassava Sciences. But the stock apears to be less risky and, when comparing its historical volatility, BioNTech SE is 5.13 times less risky than Cassava Sciences. The stock trades about -0.2 of its potential returns per unit of risk. The Cassava Sciences is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,970  in Cassava Sciences on January 24, 2024 and sell it today you would earn a total of  85.00  from holding Cassava Sciences or generate 4.31% return on investment over 90 days.

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

BioNTech SE  vs.  Cassava Sciences

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.

Cassava Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cassava Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat 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.

Pair Trading with BioNTech and Cassava Sciences

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

The idea behind BioNTech SE and Cassava Sciences 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.