Correlation Between BB Biotech and Inficon Holding
Can any of the company-specific risk be diversified away by investing in both BB Biotech and Inficon Holding 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 BB Biotech and Inficon Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BB Biotech AG and Inficon Holding, you can compare the effects of market volatilities on BB Biotech and Inficon Holding 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 BB Biotech with a short position of Inficon Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Biotech and Inficon Holding.
Diversification Opportunities for BB Biotech and Inficon Holding
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BION and Inficon is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and Inficon Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inficon Holding and BB Biotech 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 BB Biotech AG are associated (or correlated) with Inficon Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inficon Holding has no effect on the direction of BB Biotech i.e., BB Biotech and Inficon Holding go up and down completely randomly.
Pair Corralation between BB Biotech and Inficon Holding
Assuming the 90 days trading horizon BB Biotech AG is expected to generate 1.15 times more return on investment than Inficon Holding. However, BB Biotech is 1.15 times more volatile than Inficon Holding. It trades about 0.08 of its potential returns per unit of risk. Inficon Holding is currently generating about -0.24 per unit of risk. 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BB Biotech AG vs. Inficon Holding
Performance |
| Timeline |
| BB Biotech AG |
| Inficon Holding |
BB Biotech and Inficon Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BB Biotech and Inficon Holding
The main advantage of trading using opposite BB Biotech and Inficon Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Biotech position performs unexpectedly, Inficon Holding 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 Inficon Holding will offset losses from the drop in Inficon Holding's long position.| BB Biotech vs. Swiss Life Holding | BB Biotech vs. Swiss Re AG | BB Biotech vs. Helvetia Holding AG | BB Biotech vs. Partners Group Holding |
| Inficon Holding vs. VAT Group AG | Inficon Holding vs. Comet Holding AG | Inficon Holding vs. Belimo Holding | Inficon Holding vs. Bachem Holding AG |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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