Correlation Between Lonza Group and DiaSorin SpA

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

Diversification Opportunities for Lonza Group and DiaSorin SpA

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Lonza and DiaSorin is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lonza Group AG and DiaSorin SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiaSorin SpA 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 DiaSorin SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiaSorin SpA has no effect on the direction of Lonza Group i.e., Lonza Group and DiaSorin SpA go up and down completely randomly.

Pair Corralation between Lonza Group and DiaSorin SpA

If you would invest  0.00  in Lonza Group AG on September 20, 2024 and sell it today you would earn a total of  0.00  from holding Lonza Group AG or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy0.32%
ValuesDaily Returns

Lonza Group AG  vs.  DiaSorin SpA

 Performance 
       Timeline  
Lonza Group AG 

Risk-Adjusted Performance

0 of 100

 
Weak
 
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 fairly strong technical and fundamental indicators, Lonza Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
DiaSorin SpA 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in DiaSorin SpA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, DiaSorin SpA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lonza Group and DiaSorin SpA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lonza Group and DiaSorin SpA

The main advantage of trading using opposite Lonza Group and DiaSorin SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonza Group position performs unexpectedly, DiaSorin SpA 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 DiaSorin SpA will offset losses from the drop in DiaSorin SpA's long position.
The idea behind Lonza Group AG and DiaSorin SpA 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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