Correlation Between Swiss Leader and Lonza Group
Can any of the company-specific risk be diversified away by investing in both Swiss Leader and Lonza Group 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 Swiss Leader and Lonza Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Leader Price and Lonza Group AG, you can compare the effects of market volatilities on Swiss Leader and Lonza Group 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 Swiss Leader with a short position of Lonza Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Leader and Lonza Group.
Diversification Opportunities for Swiss Leader and Lonza Group
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Swiss and Lonza is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price and Lonza Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group AG and Swiss Leader 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 Swiss Leader Price are associated (or correlated) with Lonza Group. 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 AG has no effect on the direction of Swiss Leader i.e., Swiss Leader and Lonza Group go up and down completely randomly.
Pair Corralation between Swiss Leader and Lonza Group
Assuming the 90 days trading horizon Swiss Leader Price is expected to generate 0.37 times more return on investment than Lonza Group. However, Swiss Leader Price is 2.72 times less risky than Lonza Group. It trades about 0.03 of its potential returns per unit of risk. Lonza Group AG is currently generating about -0.01 per unit of risk. If you would invest 192,731 in Swiss Leader Price on September 1, 2024 and sell it today you would earn a total of 1,024 from holding Swiss Leader Price or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Swiss Leader Price vs. Lonza Group AG
Performance |
| Timeline |
Swiss Leader and Lonza Group Volatility Contrast
Predicted Return Density |
| Returns |
Swiss Leader Price
Pair trading matchups for Swiss Leader
Lonza Group AG
Pair trading matchups for Lonza Group
Pair Trading with Swiss Leader and Lonza Group
The main advantage of trading using opposite Swiss Leader and Lonza Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Leader position performs unexpectedly, Lonza Group 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 Group will offset losses from the drop in Lonza Group's long position.| Swiss Leader vs. Graubuendner Kantonalbank | Swiss Leader vs. Thurgauer Kantonalbank | Swiss Leader vs. mobilezone ag | Swiss Leader vs. Zurich Insurance Group |
| Lonza Group vs. Sika AG | Lonza Group vs. Givaudan SA | Lonza Group vs. Geberit AG | Lonza Group vs. Swiss Life Holding |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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