Correlation Between DocuSign and Lonza
Can any of the company-specific risk be diversified away by investing in both DocuSign 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 DocuSign and Lonza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DocuSign and Lonza Group, you can compare the effects of market volatilities on DocuSign 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 DocuSign with a short position of Lonza. Check out your portfolio center. Please also check ongoing floating volatility patterns of DocuSign and Lonza.
Diversification Opportunities for DocuSign and Lonza
Excellent diversification
The 3 months correlation between DocuSign and Lonza is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding DocuSign and Lonza Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group and DocuSign 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 DocuSign 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 DocuSign i.e., DocuSign and Lonza go up and down completely randomly.
Pair Corralation between DocuSign and Lonza
Given the investment horizon of 90 days DocuSign is expected to generate 0.85 times more return on investment than Lonza. However, DocuSign is 1.18 times less risky than Lonza. It trades about 0.28 of its potential returns per unit of risk. Lonza Group is currently generating about 0.02 per unit of risk. If you would invest 6,938 in DocuSign on September 1, 2024 and sell it today you would earn a total of 1,031 from holding DocuSign or generate 14.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
DocuSign vs. Lonza Group
Performance |
| Timeline |
| DocuSign |
| Lonza Group |
DocuSign and Lonza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DocuSign and Lonza
The main advantage of trading using opposite DocuSign and Lonza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DocuSign 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.The idea behind DocuSign and Lonza Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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