Correlation Between Lonza Group and BB Biotech
Can any of the company-specific risk be diversified away by investing in both Lonza Group and BB Biotech 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 BB Biotech 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 BB Biotech AG, you can compare the effects of market volatilities on Lonza Group and BB Biotech 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 BB Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonza Group and BB Biotech.
Diversification Opportunities for Lonza Group and BB Biotech
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lonza and BION is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lonza Group AG and BB Biotech AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Biotech 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 BB Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Biotech AG has no effect on the direction of Lonza Group i.e., Lonza Group and BB Biotech go up and down completely randomly.
Pair Corralation between Lonza Group and BB Biotech
Assuming the 90 days trading horizon Lonza Group AG is expected to generate 1.26 times more return on investment than BB Biotech. However, Lonza Group is 1.26 times more volatile than BB Biotech AG. It trades about 0.03 of its potential returns per unit of risk. BB Biotech AG is currently generating about -0.05 per unit of risk. If you would invest 49,900 in Lonza Group AG on September 3, 2024 and sell it today you would earn a total of 2,740 from holding Lonza Group AG or generate 5.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lonza Group AG vs. BB Biotech AG
Performance |
| Timeline |
| Lonza Group AG |
| BB Biotech AG |
Lonza Group and BB Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lonza Group and BB Biotech
The main advantage of trading using opposite Lonza Group and BB Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonza Group position performs unexpectedly, BB Biotech 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 BB Biotech will offset losses from the drop in BB Biotech's long position.| Lonza Group vs. Sika AG | Lonza Group vs. Givaudan SA | Lonza Group vs. Geberit AG | Lonza Group vs. Swiss Life Holding |
| BB Biotech vs. VAT Group AG | BB Biotech vs. Lonza Group AG | BB Biotech vs. Basilea Pharmaceutica AG | BB Biotech vs. Straumann 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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