Correlation Between Baloise Holding and Relief Therapeutics

Can any of the company-specific risk be diversified away by investing in both Baloise Holding and Relief Therapeutics 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 Baloise Holding and Relief Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Baloise Holding AG and Relief Therapeutics Holding, you can compare the effects of market volatilities on Baloise Holding and Relief Therapeutics 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 Baloise Holding with a short position of Relief Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baloise Holding and Relief Therapeutics.

Diversification Opportunities for Baloise Holding and Relief Therapeutics

-0.88

Correlation Coefficient

Baloise Holding  Relief Therapeutics

Pay attention - limited upside

The 3 months correlation between Baloise and Relief is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG and Relief Therapeutics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relief Therapeutics and Baloise 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 Baloise Holding AG are associated (or correlated) with Relief Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relief Therapeutics has no effect on the direction of Baloise Holding i.e., Baloise Holding and Relief Therapeutics go up and down completely randomly.

Pair Corralation between Baloise Holding and Relief Therapeutics

Assuming the 90 days trading horizon Baloise Holding AG is expected to generate 0.25 times more return on investment than Relief Therapeutics. However, Baloise Holding AG is 4.08 times less risky than Relief Therapeutics. It trades about 0.25 of its potential returns per unit of risk. Relief Therapeutics Holding is currently generating about -0.2 per unit of risk. If you would invest  16,410  in Baloise Holding AG on December 28, 2024 and sell it today you would earn a total of  2,770  from holding Baloise Holding AG or generate 16.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Baloise Holding AG  vs.  Relief Therapeutics Holding

Baloise Holding AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baloise Holding AG are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Baloise Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Relief Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Relief Therapeutics Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Baloise Holding and Relief Therapeutics

The main advantage of trading using opposite Baloise Holding and Relief Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baloise Holding position performs unexpectedly, Relief Therapeutics 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 Relief Therapeutics will offset losses from the drop in Relief Therapeutics' long position.

The idea behind Baloise Holding AG and Relief Therapeutics Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.