Correlation Between Bachem Holding and Sensirion Holding

Can any of the company-specific risk be diversified away by investing in both Bachem Holding and Sensirion Holding 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 Sensirion Holding 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 Sensirion Holding AG, you can compare the effects of market volatilities on Bachem Holding and Sensirion Holding 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 Sensirion Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bachem Holding and Sensirion Holding.

Diversification Opportunities for Bachem Holding and Sensirion Holding

-0.54

Correlation Coefficient

Bachem Holding  Sensirion Holding

Excellent diversification

The 3 months correlation between Bachem and Sensirion is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bachem Holding AG and Sensirion Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensirion 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 Sensirion Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensirion Holding has no effect on the direction of Bachem Holding i.e., Bachem Holding and Sensirion Holding go up and down completely randomly.

Pair Corralation between Bachem Holding and Sensirion Holding

Assuming the 90 days trading horizon Bachem Holding AG is expected to under-perform the Sensirion Holding. But the stock apears to be less risky and, when comparing its historical volatility, Bachem Holding AG is 2.3 times less risky than Sensirion Holding. The stock trades about -0.06 of its potential returns per unit of risk. The Sensirion Holding AG is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5,540  in Sensirion Holding AG on December 30, 2024 and sell it today you would earn a total of  1,550  from holding Sensirion Holding AG or generate 27.98% return on investment over 90 days.

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

Bachem Holding AG  vs.  Sensirion Holding AG

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.

Sensirion Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sensirion Holding AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sensirion Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bachem Holding and Sensirion Holding

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

The idea behind Bachem Holding AG and Sensirion Holding AG 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.