Correlation Between Komax Holding and Basilea Pharmaceutica

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

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

Diversification Opportunities for Komax Holding and Basilea Pharmaceutica

-0.35

Correlation Coefficient

Komax Holding  Basilea Pharmaceutica

Very good diversification

The 3 months correlation between Komax and Basilea is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Komax Holding AG and Basilea Pharmaceutica AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basilea Pharmaceutica and Komax 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 Komax Holding AG are associated (or correlated) with Basilea Pharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basilea Pharmaceutica has no effect on the direction of Komax Holding i.e., Komax Holding and Basilea Pharmaceutica go up and down completely randomly.

Pair Corralation between Komax Holding and Basilea Pharmaceutica

Assuming the 90 days trading horizon Komax Holding AG is expected to under-perform the Basilea Pharmaceutica. In addition to that, Komax Holding is 2.24 times more volatile than Basilea Pharmaceutica AG. It trades about -0.01 of its total potential returns per unit of risk. Basilea Pharmaceutica AG is currently generating about 0.13 per unit of volatility. If you would invest  4,135  in Basilea Pharmaceutica AG on December 28, 2024 and sell it today you would earn a total of  530.00  from holding Basilea Pharmaceutica AG or generate 12.82% return on investment over 90 days.

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

Komax Holding AG  vs.  Basilea Pharmaceutica AG

Komax Holding AG

Risk-Adjusted Performance

Very Weak

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

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 showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Komax Holding and Basilea Pharmaceutica

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

The idea behind Komax Holding AG and Basilea Pharmaceutica 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 Commodity Directory module to find actively traded commodities issued by global exchanges.