Correlation Between Lonza Group and BioMark Diagnostics

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Can any of the company-specific risk be diversified away by investing in both Lonza Group and BioMark Diagnostics 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 BioMark Diagnostics 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 BioMark Diagnostics, you can compare the effects of market volatilities on Lonza Group and BioMark Diagnostics 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 BioMark Diagnostics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonza Group and BioMark Diagnostics.

Diversification Opportunities for Lonza Group and BioMark Diagnostics

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Lonza and BioMark is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lonza Group AG and BioMark Diagnostics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioMark Diagnostics 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 BioMark Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioMark Diagnostics has no effect on the direction of Lonza Group i.e., Lonza Group and BioMark Diagnostics go up and down completely randomly.

Pair Corralation between Lonza Group and BioMark Diagnostics

Assuming the 90 days horizon Lonza Group AG is expected to under-perform the BioMark Diagnostics. In addition to that, Lonza Group is 1.01 times more volatile than BioMark Diagnostics. It trades about -0.13 of its total potential returns per unit of risk. BioMark Diagnostics is currently generating about 0.01 per unit of volatility. If you would invest  15.00  in BioMark Diagnostics on September 12, 2024 and sell it today you would earn a total of  0.00  from holding BioMark Diagnostics or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

Lonza Group AG  vs.  BioMark Diagnostics

 Performance 
       Timeline  
Lonza Group AG 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days Lonza Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
BioMark Diagnostics 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days BioMark Diagnostics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Lonza Group and BioMark Diagnostics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lonza Group and BioMark Diagnostics

The main advantage of trading using opposite Lonza Group and BioMark Diagnostics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonza Group position performs unexpectedly, BioMark Diagnostics 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 BioMark Diagnostics will offset losses from the drop in BioMark Diagnostics' long position.
The idea behind Lonza Group AG and BioMark Diagnostics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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