Correlation Between Lonza Group and China New

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Can any of the company-specific risk be diversified away by investing in both Lonza Group and China New 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 Lonza Group and China New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lonza Group and China New Energy, you can compare the effects of market volatilities on Lonza Group and China New 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 Lonza Group with a short position of China New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonza Group and China New.

Diversification Opportunities for Lonza Group and China New

-0.35
  Correlation Coefficient

Very good diversification

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

Pair Corralation between Lonza Group and China New

If you would invest  63,214  in Lonza Group on November 19, 2024 and sell it today you would earn a total of  1,116  from holding Lonza Group or generate 1.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lonza Group  vs.  China New Energy

 Performance 
       Timeline  
Lonza Group 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Lonza Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Lonza Group reported solid returns over the last few months and may actually be approaching a breakup point.
China New Energy 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days China New Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, China New is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Lonza Group and China New Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lonza Group and China New

The main advantage of trading using opposite Lonza Group and China New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonza Group position performs unexpectedly, China New 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 China New will offset losses from the drop in China New's long position.
The idea behind Lonza Group and China New Energy 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.
Check out your portfolio center.
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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