Correlation Between Bachem Holding and Carlo Gavazzi

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

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

Diversification Opportunities for Bachem Holding and Carlo Gavazzi

-0.3

Correlation Coefficient

Bachem Holding  Carlo Gavazzi

Very good diversification

The 3 months correlation between Bachem and Carlo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bachem Holding AG and Carlo Gavazzi Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlo Gavazzi Holding and Bachem 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 Bachem Holding AG are associated (or correlated) with Carlo Gavazzi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlo Gavazzi Holding has no effect on the direction of Bachem Holding i.e., Bachem Holding and Carlo Gavazzi go up and down completely randomly.

Pair Corralation between Bachem Holding and Carlo Gavazzi

Assuming the 90 days trading horizon Bachem Holding AG is expected to under-perform the Carlo Gavazzi. But the stock apears to be less risky and, when comparing its historical volatility, Bachem Holding AG is 1.31 times less risky than Carlo Gavazzi. The stock trades about -0.06 of its potential returns per unit of risk. The Carlo Gavazzi Holding is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  18,350  in Carlo Gavazzi Holding on December 29, 2024 and sell it today you would earn a total of  1,500  from holding Carlo Gavazzi Holding or generate 8.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Bachem Holding AG  vs.  Carlo Gavazzi Holding

Bachem Holding AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bachem Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Carlo Gavazzi Holding

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carlo Gavazzi Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Carlo Gavazzi may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bachem Holding and Carlo Gavazzi

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

The idea behind Bachem Holding AG and Carlo Gavazzi 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.