Correlation Between BioNTech and Japan Tobacco

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

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

Diversification Opportunities for BioNTech and Japan Tobacco

-0.37

Correlation Coefficient

BioNTech  Japan Tobacco

Very good diversification

The 3 months correlation between BioNTech and Japan is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco 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 Japan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Tobacco has no effect on the direction of BioNTech i.e., BioNTech and Japan Tobacco go up and down completely randomly.

Pair Corralation between BioNTech and Japan Tobacco

Assuming the 90 days trading horizon BioNTech SE is expected to generate 2.72 times more return on investment than Japan Tobacco. However, BioNTech is 2.72 times more volatile than Japan Tobacco. It trades about 0.03 of its potential returns per unit of risk. Japan Tobacco is currently generating about -0.03 per unit of risk. If you would invest  9,120  in BioNTech SE on April 20, 2025 and sell it today you would earn a total of  320.00  from holding BioNTech SE or generate 3.51% return on investment over 90 days.

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

BioNTech SE  vs.  Japan Tobacco

BioNTech SE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, BioNTech may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Japan Tobacco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Japan Tobacco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Japan Tobacco is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BioNTech and Japan Tobacco

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

The idea behind BioNTech SE and Japan Tobacco 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.