Correlation Between Basilea Pharmaceutica and Addex Therapeutics

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

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

Diversification Opportunities for Basilea Pharmaceutica and Addex Therapeutics

-0.3

Correlation Coefficient

Basilea Pharmaceutica  Addex Therapeutics

Very good diversification

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

Pair Corralation between Basilea Pharmaceutica and Addex Therapeutics

Assuming the 90 days trading horizon Basilea Pharmaceutica AG is expected to generate 0.29 times more return on investment than Addex Therapeutics. However, Basilea Pharmaceutica AG is 3.49 times less risky than Addex Therapeutics. It trades about 0.12 of its potential returns per unit of risk. Addex Therapeutics is currently generating about 0.01 per unit of risk. If you would invest  4,135  in Basilea Pharmaceutica AG on December 30, 2024 and sell it today you would earn a total of  515.00  from holding Basilea Pharmaceutica AG or generate 12.45% return on investment over 90 days.

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

Basilea Pharmaceutica AG  vs.  Addex Therapeutics

Basilea Pharmaceutica

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Basilea Pharmaceutica AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Basilea Pharmaceutica may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Addex Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Addex Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Addex Therapeutics 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 Basilea Pharmaceutica and Addex Therapeutics

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

The idea behind Basilea Pharmaceutica AG and Addex Therapeutics 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..