Correlation Between Lonza Group and SKAN Group
Can any of the company-specific risk be diversified away by investing in both Lonza Group and SKAN Group 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 SKAN Group 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 SKAN Group AG, you can compare the effects of market volatilities on Lonza Group and SKAN Group 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 SKAN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonza Group and SKAN Group.
Diversification Opportunities for Lonza Group and SKAN Group
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lonza and SKAN is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lonza Group AG and SKAN Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKAN Group 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 SKAN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKAN Group AG has no effect on the direction of Lonza Group i.e., Lonza Group and SKAN Group go up and down completely randomly.
Pair Corralation between Lonza Group and SKAN Group
Assuming the 90 days trading horizon Lonza Group AG is expected to generate 1.0 times more return on investment than SKAN Group. However, Lonza Group is 1.0 times more volatile than SKAN Group AG. It trades about -0.08 of its potential returns per unit of risk. SKAN Group AG is currently generating about -0.09 per unit of risk. If you would invest 54,980 in Lonza Group AG on August 28, 2024 and sell it today you would lose (2,320) from holding Lonza Group AG or give up 4.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lonza Group AG vs. SKAN Group AG
Performance |
| Timeline |
| Lonza Group AG |
| SKAN Group AG |
Lonza Group and SKAN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lonza Group and SKAN Group
The main advantage of trading using opposite Lonza Group and SKAN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonza Group position performs unexpectedly, SKAN Group 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 SKAN Group will offset losses from the drop in SKAN Group's long position.| Lonza Group vs. Sika AG | Lonza Group vs. Givaudan SA | Lonza Group vs. Geberit AG | Lonza Group vs. Swiss Life Holding |
| SKAN Group vs. Sika AG | SKAN Group vs. Lonza Group AG | SKAN Group vs. Givaudan SA | SKAN Group vs. Partners Group Holding |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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