Correlation Between BB Biotech and Thurgauer Kantonalbank

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

Diversification Opportunities for BB Biotech and Thurgauer Kantonalbank

-0.49

Correlation Coefficient

BB Biotech  Thurgauer Kantonalbank

Very good diversification

The 3 months correlation between BION and Thurgauer is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and Thurgauer Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thurgauer Kantonalbank 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 Thurgauer Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thurgauer Kantonalbank has no effect on the direction of BB Biotech i.e., BB Biotech and Thurgauer Kantonalbank go up and down completely randomly.

Pair Corralation between BB Biotech and Thurgauer Kantonalbank

Assuming the 90 days trading horizon BB Biotech AG is expected to under-perform the Thurgauer Kantonalbank. In addition to that, BB Biotech is 1.37 times more volatile than Thurgauer Kantonalbank. It trades about -0.06 of its total potential returns per unit of risk. Thurgauer Kantonalbank is currently generating about 0.16 per unit of volatility. If you would invest  12,700  in Thurgauer Kantonalbank on December 30, 2024 and sell it today you would earn a total of  1,400  from holding Thurgauer Kantonalbank or generate 11.02% return on investment over 90 days.

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

BB Biotech AG  vs.  Thurgauer Kantonalbank

BB Biotech AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days BB Biotech AG has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Thurgauer Kantonalbank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thurgauer Kantonalbank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Thurgauer Kantonalbank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BB Biotech and Thurgauer Kantonalbank

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

The idea behind BB Biotech AG and Thurgauer Kantonalbank 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.