Correlation Between Caredx and Lonza
Can any of the company-specific risk be diversified away by investing in both Caredx and Lonza 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 Caredx and Lonza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caredx Inc and Lonza Group, you can compare the effects of market volatilities on Caredx and Lonza 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 Caredx with a short position of Lonza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caredx and Lonza.
Diversification Opportunities for Caredx and Lonza
Very weak diversification
The 3 months correlation between Caredx and Lonza is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Caredx Inc and Lonza Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group and Caredx 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 Caredx Inc are associated (or correlated) with Lonza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonza Group has no effect on the direction of Caredx i.e., Caredx and Lonza go up and down completely randomly.
Pair Corralation between Caredx and Lonza
Given the investment horizon of 90 days Caredx Inc is expected to generate 0.79 times more return on investment than Lonza. However, Caredx Inc is 1.27 times less risky than Lonza. It trades about 0.22 of its potential returns per unit of risk. Lonza Group is currently generating about 0.02 per unit of risk. If you would invest 2,213 in Caredx Inc on September 1, 2024 and sell it today you would earn a total of 241.00 from holding Caredx Inc or generate 10.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Caredx Inc vs. Lonza Group
Performance |
| Timeline |
| Caredx Inc |
| Lonza Group |
Caredx and Lonza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caredx and Lonza
The main advantage of trading using opposite Caredx and Lonza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caredx position performs unexpectedly, Lonza 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 Lonza will offset losses from the drop in Lonza's long position.| Caredx vs. Castle Biosciences | Caredx vs. Twist Bioscience Corp | Caredx vs. Biodesix | Caredx vs. Natera Inc |
| Lonza vs. China New Energy | Lonza vs. Sonic Healthcare Ltd | Lonza vs. Charles River Laboratories | Lonza vs. Qiagen NV |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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