Correlation Between Stellus Capital and Lonza
Can any of the company-specific risk be diversified away by investing in both Stellus Capital and Lonza 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 Stellus Capital and Lonza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellus Capital Investment and Lonza Group, you can compare the effects of market volatilities on Stellus Capital and Lonza 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 Stellus Capital with a short position of Lonza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellus Capital and Lonza.
Diversification Opportunities for Stellus Capital and Lonza
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stellus and Lonza is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Stellus Capital Investment and Lonza Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group and Stellus Capital 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 Stellus Capital Investment are associated (or correlated) with Lonza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonza Group has no effect on the direction of Stellus Capital i.e., Stellus Capital and Lonza go up and down completely randomly.
Pair Corralation between Stellus Capital and Lonza
Considering the 90-day investment horizon Stellus Capital is expected to generate 1.62 times less return on investment than Lonza. But when comparing it to its historical volatility, Stellus Capital Investment is 3.78 times less risky than Lonza. It trades about 0.1 of its potential returns per unit of risk. Lonza Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 51,209 in Lonza Group on September 1, 2024 and sell it today you would earn a total of 9,466 from holding Lonza Group or generate 18.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Stellus Capital Investment vs. Lonza Group
Performance |
| Timeline |
| Stellus Capital Inve |
| Lonza Group |
Stellus Capital and Lonza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellus Capital and Lonza
The main advantage of trading using opposite Stellus Capital and Lonza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellus Capital position performs unexpectedly, Lonza 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 Lonza will offset losses from the drop in Lonza's long position.| Stellus Capital vs. PennantPark Floating Rate | Stellus Capital vs. Gladstone Capital | Stellus Capital vs. Gladstone Investment | Stellus Capital vs. Prospect Capital |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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