Correlation Between Lonza Group and Tecan Group
Can any of the company-specific risk be diversified away by investing in both Lonza Group and Tecan 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 Tecan 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 Tecan Group AG, you can compare the effects of market volatilities on Lonza Group and Tecan 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 Tecan Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonza Group and Tecan Group.
Diversification Opportunities for Lonza Group and Tecan Group
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lonza and Tecan is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lonza Group AG and Tecan Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecan 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 Tecan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecan Group AG has no effect on the direction of Lonza Group i.e., Lonza Group and Tecan Group go up and down completely randomly.
Pair Corralation between Lonza Group and Tecan Group
Assuming the 90 days trading horizon Lonza Group AG is expected to generate 0.99 times more return on investment than Tecan Group. However, Lonza Group AG is 1.01 times less risky than Tecan Group. It trades about 0.0 of its potential returns per unit of risk. Tecan Group AG is currently generating about -0.05 per unit of risk. If you would invest 57,361 in Lonza Group AG on August 31, 2024 and sell it today you would lose (4,721) from holding Lonza Group AG or give up 8.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Lonza Group AG vs. Tecan Group AG
Performance |
| Timeline |
| Lonza Group AG |
| Tecan Group AG |
Lonza Group and Tecan Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lonza Group and Tecan Group
The main advantage of trading using opposite Lonza Group and Tecan Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonza Group position performs unexpectedly, Tecan 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 Tecan Group will offset losses from the drop in Tecan 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 |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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