Correlation Between Lion Biotechnologies and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Lion Biotechnologies and Volkswagen 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 Lion Biotechnologies and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Biotechnologies and Volkswagen AG, you can compare the effects of market volatilities on Lion Biotechnologies and Volkswagen 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 Lion Biotechnologies with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Biotechnologies and Volkswagen.
Diversification Opportunities for Lion Biotechnologies and Volkswagen
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lion and Volkswagen is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and Lion Biotechnologies 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 Lion Biotechnologies are associated (or correlated) with Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Lion Biotechnologies i.e., Lion Biotechnologies and Volkswagen go up and down completely randomly.
Pair Corralation between Lion Biotechnologies and Volkswagen
Assuming the 90 days trading horizon Lion Biotechnologies is expected to under-perform the Volkswagen. In addition to that, Lion Biotechnologies is 3.17 times more volatile than Volkswagen AG. It trades about -0.11 of its total potential returns per unit of risk. Volkswagen AG is currently generating about 0.09 per unit of volatility. If you would invest 8,690 in Volkswagen AG on September 13, 2024 and sell it today you would earn a total of 210.00 from holding Volkswagen AG or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Biotechnologies vs. Volkswagen AG
Performance |
| Timeline |
| Lion Biotechnologies |
| Volkswagen AG |
Lion Biotechnologies and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Biotechnologies and Volkswagen
The main advantage of trading using opposite Lion Biotechnologies and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Biotechnologies position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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