Correlation Between Tat Techno and Lonza
Can any of the company-specific risk be diversified away by investing in both Tat Techno 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 Tat Techno and Lonza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tat Techno and Lonza Group, you can compare the effects of market volatilities on Tat Techno 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 Tat Techno with a short position of Lonza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tat Techno and Lonza.
Diversification Opportunities for Tat Techno and Lonza
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tat and Lonza is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tat Techno and Lonza Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group and Tat Techno 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 Tat Techno 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 Tat Techno i.e., Tat Techno and Lonza go up and down completely randomly.
Pair Corralation between Tat Techno and Lonza
Given the investment horizon of 90 days Tat Techno is expected to generate 1.51 times more return on investment than Lonza. However, Tat Techno is 1.51 times more volatile than Lonza Group. It trades about 0.26 of its potential returns per unit of risk. Lonza Group is currently generating about 0.02 per unit of risk. If you would invest 1,823 in Tat Techno on September 1, 2024 and sell it today you would earn a total of 455.00 from holding Tat Techno or generate 24.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tat Techno vs. Lonza Group
Performance |
| Timeline |
| Tat Techno |
| Lonza Group |
Tat Techno and Lonza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tat Techno and Lonza
The main advantage of trading using opposite Tat Techno and Lonza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tat Techno 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.| Tat Techno vs. Innovative Solutions and | Tat Techno vs. CPI Aerostructures | Tat Techno vs. Air Industries Group | Tat Techno vs. Ballistic Recovery Systems |
| Lonza vs. China New Energy | Lonza vs. Sonic Healthcare Ltd | Lonza vs. Charles River Laboratories | Lonza vs. Qiagen NV |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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