Correlation Between Lonza Group and WuXi AppTec
Can any of the company-specific risk be diversified away by investing in both Lonza Group and WuXi AppTec 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 WuXi AppTec 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 WuXi AppTec Co, you can compare the effects of market volatilities on Lonza Group and WuXi AppTec 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 WuXi AppTec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonza Group and WuXi AppTec.
Diversification Opportunities for Lonza Group and WuXi AppTec
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lonza and WuXi is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lonza Group AG and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec 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 WuXi AppTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi AppTec has no effect on the direction of Lonza Group i.e., Lonza Group and WuXi AppTec go up and down completely randomly.
Pair Corralation between Lonza Group and WuXi AppTec
Assuming the 90 days horizon Lonza Group AG is expected to generate 0.54 times more return on investment than WuXi AppTec. However, Lonza Group AG is 1.84 times less risky than WuXi AppTec. It trades about -0.06 of its potential returns per unit of risk. WuXi AppTec Co is currently generating about -0.05 per unit of risk. If you would invest 6,167 in Lonza Group AG on September 1, 2024 and sell it today you would lose (204.00) from holding Lonza Group AG or give up 3.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lonza Group AG vs. WuXi AppTec Co
Performance |
| Timeline |
| Lonza Group AG |
| WuXi AppTec |
Lonza Group and WuXi AppTec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lonza Group and WuXi AppTec
The main advantage of trading using opposite Lonza Group and WuXi AppTec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonza Group position performs unexpectedly, WuXi AppTec 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 WuXi AppTec will offset losses from the drop in WuXi AppTec's long position.| Lonza Group vs. Revvity | Lonza Group vs. Sonic Healthcare Limited | Lonza Group vs. Personalis | Lonza Group vs. Applied DNA Sciences |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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