Correlation Between Alvotech and BioNTech

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

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

Diversification Opportunities for Alvotech and BioNTech

0.35

Correlation Coefficient

Alvotech  BioNTech

Weak diversification

The 3 months correlation between Alvotech and BioNTech is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Alvotech 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 Alvotech 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 Alvotech i.e., Alvotech and BioNTech go up and down completely randomly.

Pair Corralation between Alvotech and BioNTech

Given the investment horizon of 90 days Alvotech is expected to under-perform the BioNTech. In addition to that, Alvotech is 1.14 times more volatile than BioNTech SE. It trades about -0.03 of its total potential returns per unit of risk. BioNTech SE is currently generating about 0.05 per unit of volatility. If you would invest  9,291  in BioNTech SE on March 14, 2024 and sell it today you would earn a total of  589.00  from holding BioNTech SE or generate 6.34% return on investment over 90 days.

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

Alvotech  vs.  BioNTech SE

Alvotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alvotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Alvotech is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

BioNTech SE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BioNTech may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Alvotech and BioNTech

The main advantage of trading using opposite Alvotech and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvotech 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 Alvotech 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..