Correlation Between Lonza and Charles River
Can any of the company-specific risk be diversified away by investing in both Lonza and Charles River 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 and Charles River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lonza Group and Charles River Laboratories, you can compare the effects of market volatilities on Lonza and Charles River 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 with a short position of Charles River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonza and Charles River.
Diversification Opportunities for Lonza and Charles River
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lonza and Charles is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lonza Group and Charles River Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles River Labora and Lonza 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 are associated (or correlated) with Charles River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles River Labora has no effect on the direction of Lonza i.e., Lonza and Charles River go up and down completely randomly.
Pair Corralation between Lonza and Charles River
Assuming the 90 days horizon Lonza is expected to generate 10.21 times less return on investment than Charles River. But when comparing it to its historical volatility, Lonza Group is 1.31 times less risky than Charles River. It trades about 0.02 of its potential returns per unit of risk. Charles River Laboratories is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 17,858 in Charles River Laboratories on September 1, 2024 and sell it today you would earn a total of 2,048 from holding Charles River Laboratories or generate 11.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lonza Group vs. Charles River Laboratories
Performance |
| Timeline |
| Lonza Group |
| Charles River Labora |
Lonza and Charles River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lonza and Charles River
The main advantage of trading using opposite Lonza and Charles River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonza position performs unexpectedly, Charles River 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 Charles River will offset losses from the drop in Charles River's long position.| Lonza vs. China New Energy | Lonza vs. Sonic Healthcare Ltd | Lonza vs. Charles River Laboratories | Lonza vs. Qiagen NV |
| Charles River vs. ICON PLC | Charles River vs. Mettler Toledo International | Charles River vs. Laboratory of | Charles River vs. Waters |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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