Correlation Between Lonza Group and Baloise Holding
Can any of the company-specific risk be diversified away by investing in both Lonza Group and Baloise 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 Lonza Group and Baloise Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lonza Group AG and Baloise Holding AG, you can compare the effects of market volatilities on Lonza Group and Baloise 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 Lonza Group with a short position of Baloise Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonza Group and Baloise Holding.
Diversification Opportunities for Lonza Group and Baloise Holding
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lonza and Baloise is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lonza Group AG and Baloise Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baloise Holding AG and Lonza Group 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 Lonza Group AG are associated (or correlated) with Baloise Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baloise Holding AG has no effect on the direction of Lonza Group i.e., Lonza Group and Baloise Holding go up and down completely randomly.
Pair Corralation between Lonza Group and Baloise Holding
Assuming the 90 days trading horizon Lonza Group AG is expected to under-perform the Baloise Holding. In addition to that, Lonza Group is 2.91 times more volatile than Baloise Holding AG. It trades about -0.06 of its total potential returns per unit of risk. Baloise Holding AG is currently generating about -0.04 per unit of volatility. If you would invest 16,760 in Baloise Holding AG on September 5, 2024 and sell it today you would lose (110.00) from holding Baloise Holding AG or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lonza Group AG vs. Baloise Holding AG
Performance |
| Timeline |
| Lonza Group AG |
| Baloise Holding AG |
Lonza Group and Baloise Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lonza Group and Baloise Holding
The main advantage of trading using opposite Lonza Group and Baloise Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonza Group position performs unexpectedly, Baloise 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 Baloise Holding will offset losses from the drop in Baloise Holding's long position.| Lonza Group vs. Sika AG | Lonza Group vs. Givaudan SA | Lonza Group vs. Geberit AG | Lonza Group vs. Swiss Life Holding |
| Baloise Holding vs. Swiss Re AG | Baloise Holding vs. Swisscom AG | Baloise Holding vs. Lonza Group AG | Baloise Holding vs. Novartis 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |