Correlation Between Straumann Holding and BB Biotech
Can any of the company-specific risk be diversified away by investing in both Straumann Holding and BB Biotech 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 Straumann Holding and BB Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Straumann Holding AG and BB Biotech AG, you can compare the effects of market volatilities on Straumann Holding and BB Biotech 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 Straumann Holding with a short position of BB Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Straumann Holding and BB Biotech.
Diversification Opportunities for Straumann Holding and BB Biotech
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Straumann and BION is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Straumann Holding AG and BB Biotech AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Biotech AG and Straumann 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 Straumann Holding AG are associated (or correlated) with BB Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Biotech AG has no effect on the direction of Straumann Holding i.e., Straumann Holding and BB Biotech go up and down completely randomly.
Pair Corralation between Straumann Holding and BB Biotech
Assuming the 90 days trading horizon Straumann Holding AG is expected to generate 1.65 times more return on investment than BB Biotech. However, Straumann Holding is 1.65 times more volatile than BB Biotech AG. It trades about 0.01 of its potential returns per unit of risk. BB Biotech AG is currently generating about -0.05 per unit of risk. If you would invest 11,585 in Straumann Holding AG on September 3, 2024 and sell it today you would lose (120.00) from holding Straumann Holding AG or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Straumann Holding AG vs. BB Biotech AG
Performance |
| Timeline |
| Straumann Holding |
| BB Biotech AG |
Straumann Holding and BB Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Straumann Holding and BB Biotech
The main advantage of trading using opposite Straumann Holding and BB Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Straumann Holding position performs unexpectedly, BB Biotech 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 BB Biotech will offset losses from the drop in BB Biotech's long position.| Straumann Holding vs. Sonova H Ag | Straumann Holding vs. Sika AG | Straumann Holding vs. Lonza Group AG | Straumann Holding vs. Givaudan SA |
| BB Biotech vs. VAT Group AG | BB Biotech vs. Lonza Group AG | BB Biotech vs. Basilea Pharmaceutica AG | BB Biotech vs. Straumann Holding AG |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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