Correlation Between Lonza Group and Lonza Group
Can any of the company-specific risk be diversified away by investing in both Lonza Group and Lonza 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 Lonza Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lonza Group and Lonza Group AG, you can compare the effects of market volatilities on Lonza Group and Lonza 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 Lonza Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonza Group and Lonza Group.
Diversification Opportunities for Lonza Group and Lonza Group
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lonza and Lonza is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lonza Group and Lonza Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza 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 are associated (or correlated) with Lonza Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonza Group AG has no effect on the direction of Lonza Group i.e., Lonza Group and Lonza Group go up and down completely randomly.
Pair Corralation between Lonza Group and Lonza Group
Assuming the 90 days horizon Lonza Group is expected to generate 1.34 times more return on investment than Lonza Group. However, Lonza Group is 1.34 times more volatile than Lonza Group AG. It trades about 0.03 of its potential returns per unit of risk. Lonza Group AG is currently generating about 0.03 per unit of risk. If you would invest 50,360 in Lonza Group on September 3, 2024 and sell it today you would earn a total of 10,315 from holding Lonza Group or generate 20.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lonza Group vs. Lonza Group AG
Performance |
| Timeline |
| Lonza Group |
| Lonza Group AG |
Lonza Group and Lonza Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lonza Group and Lonza Group
The main advantage of trading using opposite Lonza Group and Lonza Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonza Group position performs unexpectedly, Lonza 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 Lonza Group will offset losses from the drop in Lonza Group's long position.| Lonza Group vs. China New Energy | Lonza Group vs. Sonic Healthcare Ltd | Lonza Group vs. Charles River Laboratories | Lonza Group vs. Qiagen NV |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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