Correlation Between Bachem Holding and BB Biotech
Can any of the company-specific risk be diversified away by investing in both Bachem Holding and BB Biotech 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 Bachem Holding and BB Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bachem Holding AG and BB Biotech AG, you can compare the effects of market volatilities on Bachem Holding and BB Biotech 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 Bachem Holding with a short position of BB Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bachem Holding and BB Biotech.
Diversification Opportunities for Bachem Holding and BB Biotech
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bachem and BION is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bachem Holding AG and BB Biotech AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Biotech AG and Bachem Holding 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 Bachem Holding AG are associated (or correlated) with BB Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Biotech AG has no effect on the direction of Bachem Holding i.e., Bachem Holding and BB Biotech go up and down completely randomly.
Pair Corralation between Bachem Holding and BB Biotech
Assuming the 90 days trading horizon Bachem Holding AG is expected to under-perform the BB Biotech. In addition to that, Bachem Holding is 1.56 times more volatile than BB Biotech AG. It trades about -0.09 of its total potential returns per unit of risk. BB Biotech AG is currently generating about 0.08 per unit of volatility. If you would invest 3,640 in BB Biotech AG on August 29, 2024 and sell it today you would earn a total of 90.00 from holding BB Biotech AG or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bachem Holding AG vs. BB Biotech AG
Performance |
| Timeline |
| Bachem Holding AG |
| BB Biotech AG |
Bachem Holding and BB Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bachem Holding and BB Biotech
The main advantage of trading using opposite Bachem Holding and BB Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bachem Holding position performs unexpectedly, BB Biotech 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 BB Biotech will offset losses from the drop in BB Biotech's long position.| Bachem Holding vs. Santhera Pharmaceuticals Holding | Bachem Holding vs. Newron Pharmaceuticals SpA | Bachem Holding vs. Basilea Pharmaceutica AG | Bachem Holding vs. Evolva Holding SA |
| BB Biotech vs. Swiss Life Holding | BB Biotech vs. Swiss Re AG | BB Biotech vs. Helvetia Holding AG | BB Biotech vs. Partners Group Holding |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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