Correlation Between CSL and BioNTech

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

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

Diversification Opportunities for CSL and BioNTech

-0.28

Correlation Coefficient

CSL  BioNTech

Very good diversification

The 3 months correlation between CSL and BioNTech is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding CSL Limited and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and CSL 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 CSL Limited 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 CSL i.e., CSL and BioNTech go up and down completely randomly.

Pair Corralation between CSL and BioNTech

Assuming the 90 days horizon CSL is expected to generate 15.98 times less return on investment than BioNTech. But when comparing it to its historical volatility, CSL Limited is 2.48 times less risky than BioNTech. It trades about 0.01 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7,900  in BioNTech SE on April 5, 2025 and sell it today you would earn a total of  1,545  from holding BioNTech SE or generate 19.56% return on investment over 90 days.

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

CSL Limited  vs.  BioNTech SE

CSL Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSL Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CSL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

BioNTech SE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, BioNTech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSL and BioNTech

The main advantage of trading using opposite CSL and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL 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 CSL Limited 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.