Correlation Between Nebag Ag and Bachem Holding
Can any of the company-specific risk be diversified away by investing in both Nebag Ag and Bachem Holding 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 Nebag Ag and Bachem Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nebag ag and Bachem Holding AG, you can compare the effects of market volatilities on Nebag Ag and Bachem Holding 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 Nebag Ag with a short position of Bachem Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nebag Ag and Bachem Holding.
Diversification Opportunities for Nebag Ag and Bachem Holding
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nebag and Bachem is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nebag ag and Bachem Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bachem Holding AG and Nebag Ag 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 Nebag ag are associated (or correlated) with Bachem Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bachem Holding AG has no effect on the direction of Nebag Ag i.e., Nebag Ag and Bachem Holding go up and down completely randomly.
Pair Corralation between Nebag Ag and Bachem Holding
Assuming the 90 days trading horizon Nebag ag is expected to under-perform the Bachem Holding. But the stock apears to be less risky and, when comparing its historical volatility, Nebag ag is 1.27 times less risky than Bachem Holding. The stock trades about -0.03 of its potential returns per unit of risk. The Bachem Holding AG is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 8,765 in Bachem Holding AG on September 1, 2024 and sell it today you would lose (1,955) from holding Bachem Holding AG or give up 22.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.26% |
| Values | Daily Returns |
Nebag ag vs. Bachem Holding AG
Performance |
| Timeline |
| Nebag ag |
| Bachem Holding AG |
Nebag Ag and Bachem Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nebag Ag and Bachem Holding
The main advantage of trading using opposite Nebag Ag and Bachem Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nebag Ag position performs unexpectedly, Bachem Holding 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 Bachem Holding will offset losses from the drop in Bachem Holding's long position.| Nebag Ag vs. Bachem Holding AG | Nebag Ag vs. Kudelski | Nebag Ag vs. Alpine Select AG | Nebag Ag vs. BB Biotech AG |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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