Correlation Between BB Biotech and Autoneum Holding

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

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

Diversification Opportunities for BB Biotech and Autoneum Holding

-0.39

Correlation Coefficient

BB Biotech  Autoneum Holding

Very good diversification

The 3 months correlation between BION and Autoneum is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and Autoneum Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoneum Holding and BB Biotech 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 BB Biotech AG are associated (or correlated) with Autoneum Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autoneum Holding has no effect on the direction of BB Biotech i.e., BB Biotech and Autoneum Holding go up and down completely randomly.

Pair Corralation between BB Biotech and Autoneum Holding

Assuming the 90 days trading horizon BB Biotech AG is expected to under-perform the Autoneum Holding. But the stock apears to be less risky and, when comparing its historical volatility, BB Biotech AG is 1.4 times less risky than Autoneum Holding. The stock trades about -0.05 of its potential returns per unit of risk. The Autoneum Holding AG is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  11,305  in Autoneum Holding AG on October 9, 2024 and sell it today you would earn a total of  835.00  from holding Autoneum Holding AG or generate 7.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

BB Biotech AG  vs.  Autoneum Holding AG

BB Biotech AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BB Biotech AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, BB Biotech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Autoneum Holding

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Autoneum Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Autoneum Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with BB Biotech and Autoneum Holding

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

The idea behind BB Biotech AG and Autoneum 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.