Correlation Between Roche Holding and Bayer Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Roche Holding and Bayer Aktiengesellscha 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 Roche Holding and Bayer Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roche Holding Ltd and Bayer Aktiengesellschaft, you can compare the effects of market volatilities on Roche Holding and Bayer Aktiengesellscha 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 Roche Holding with a short position of Bayer Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roche Holding and Bayer Aktiengesellscha.
Diversification Opportunities for Roche Holding and Bayer Aktiengesellscha
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Roche and Bayer is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Roche Holding Ltd and Bayer Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer Aktiengesellschaft and Roche Holding 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 Roche Holding Ltd are associated (or correlated) with Bayer Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer Aktiengesellschaft has no effect on the direction of Roche Holding i.e., Roche Holding and Bayer Aktiengesellscha go up and down completely randomly.
Pair Corralation between Roche Holding and Bayer Aktiengesellscha
Assuming the 90 days trading horizon Roche Holding Ltd is expected to generate 0.47 times more return on investment than Bayer Aktiengesellscha. However, Roche Holding Ltd is 2.13 times less risky than Bayer Aktiengesellscha. It trades about 0.05 of its potential returns per unit of risk. Bayer Aktiengesellschaft is currently generating about -0.02 per unit of risk. If you would invest 2,916 in Roche Holding Ltd on August 25, 2024 and sell it today you would earn a total of 425.00 from holding Roche Holding Ltd or generate 14.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roche Holding Ltd vs. Bayer Aktiengesellschaft
Performance |
| Timeline |
| Roche Holding |
| Bayer Aktiengesellschaft |
Roche Holding and Bayer Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roche Holding and Bayer Aktiengesellscha
The main advantage of trading using opposite Roche Holding and Bayer Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roche Holding position performs unexpectedly, Bayer Aktiengesellscha 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 Bayer Aktiengesellscha will offset losses from the drop in Bayer Aktiengesellscha's long position.| Roche Holding vs. Johnson Johnson | Roche Holding vs. Merck Co | Roche Holding vs. Amgen Inc | Roche Holding vs. Bayer AG NA |
| Bayer Aktiengesellscha vs. Johnson Johnson | Bayer Aktiengesellscha vs. Merck Co | Bayer Aktiengesellscha vs. Roche Holding Ltd | Bayer Aktiengesellscha vs. Amgen Inc |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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