Correlation Between Cassava Sciences and BioNTech

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

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

Diversification Opportunities for Cassava Sciences and BioNTech

0.4

Correlation Coefficient

Cassava Sciences  BioNTech

Very weak diversification

The 3 months correlation between Cassava and BioNTech is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cassava Sciences and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Cassava Sciences 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 Cassava Sciences 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 Cassava Sciences i.e., Cassava Sciences and BioNTech go up and down completely randomly.

Pair Corralation between Cassava Sciences and BioNTech

Given the investment horizon of 90 days Cassava Sciences is expected to generate 5.11 times more return on investment than BioNTech. However, Cassava Sciences is 5.11 times more volatile than BioNTech SE. It trades about 0.06 of its potential returns per unit of risk. BioNTech SE is currently generating about -0.22 per unit of risk. If you would invest  1,970  in Cassava Sciences on January 25, 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

Cassava Sciences  vs.  BioNTech SE

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 latest uncertain 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.

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.

Pair Trading with Cassava Sciences and BioNTech

The main advantage of trading using opposite Cassava Sciences and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cassava Sciences 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 Cassava Sciences 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.