Correlation Between WuXi AppTec and Lonza
Can any of the company-specific risk be diversified away by investing in both WuXi AppTec 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 WuXi AppTec and Lonza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WuXi AppTec Co and Lonza Group, you can compare the effects of market volatilities on WuXi AppTec 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 WuXi AppTec with a short position of Lonza. Check out your portfolio center. Please also check ongoing floating volatility patterns of WuXi AppTec and Lonza.
Diversification Opportunities for WuXi AppTec and Lonza
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WuXi and Lonza is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding WuXi AppTec Co and Lonza Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group and WuXi AppTec 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 WuXi AppTec Co 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 WuXi AppTec i.e., WuXi AppTec and Lonza go up and down completely randomly.
Pair Corralation between WuXi AppTec and Lonza
Assuming the 90 days horizon WuXi AppTec is expected to generate 1.63 times less return on investment than Lonza. In addition to that, WuXi AppTec is 1.67 times more volatile than Lonza Group. It trades about 0.02 of its total potential returns per unit of risk. Lonza Group is currently generating about 0.04 per unit of volatility. 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 |
WuXi AppTec Co vs. Lonza Group
Performance |
| Timeline |
| WuXi AppTec |
| Lonza Group |
WuXi AppTec and Lonza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WuXi AppTec and Lonza
The main advantage of trading using opposite WuXi AppTec and Lonza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WuXi AppTec 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.| WuXi AppTec vs. Neuronetics | WuXi AppTec vs. Intelligent Bio Solutions | WuXi AppTec vs. Biodesix | WuXi AppTec vs. Precipio |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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