Correlation Between BB Biotech and Vontobel Holding
Can any of the company-specific risk be diversified away by investing in both BB Biotech and Vontobel 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 Vontobel 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 Vontobel Holding, you can compare the effects of market volatilities on BB Biotech and Vontobel 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 Vontobel Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Biotech and Vontobel Holding.
Diversification Opportunities for BB Biotech and Vontobel Holding
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BION and Vontobel is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and Vontobel Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vontobel 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 Vontobel Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vontobel Holding has no effect on the direction of BB Biotech i.e., BB Biotech and Vontobel Holding go up and down completely randomly.
Pair Corralation between BB Biotech and Vontobel Holding
Assuming the 90 days trading horizon BB Biotech AG is expected to generate 1.97 times more return on investment than Vontobel Holding. However, BB Biotech is 1.97 times more volatile than Vontobel Holding. It trades about -0.01 of its potential returns per unit of risk. Vontobel Holding is currently generating about -0.03 per unit of risk. If you would invest 3,640 in BB Biotech AG on August 27, 2024 and sell it today you would lose (15.00) from holding BB Biotech AG or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BB Biotech AG vs. Vontobel Holding
Performance |
| Timeline |
| BB Biotech AG |
| Vontobel Holding |
BB Biotech and Vontobel Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BB Biotech and Vontobel Holding
The main advantage of trading using opposite BB Biotech and Vontobel Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Biotech position performs unexpectedly, Vontobel 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 Vontobel Holding will offset losses from the drop in Vontobel 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 |
| Vontobel Holding vs. Bachem Holding AG | Vontobel Holding vs. Kudelski | Vontobel Holding vs. Alpine Select AG | Vontobel Holding vs. BB Biotech 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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