Correlation Between Meyer Burger and Basilea Pharmaceutica

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

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

Diversification Opportunities for Meyer Burger and Basilea Pharmaceutica

-0.67

Correlation Coefficient

Meyer Burger  Basilea Pharmaceutica

Excellent diversification

The 3 months correlation between Meyer and Basilea is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Meyer Burger Tech and Basilea Pharmaceutica AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basilea Pharmaceutica and Meyer Burger 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 Meyer Burger Tech 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 Meyer Burger i.e., Meyer Burger and Basilea Pharmaceutica go up and down completely randomly.

Pair Corralation between Meyer Burger and Basilea Pharmaceutica

Assuming the 90 days trading horizon Meyer Burger Tech is expected to under-perform the Basilea Pharmaceutica. In addition to that, Meyer Burger is 3.47 times more volatile than Basilea Pharmaceutica AG. It trades about -0.09 of its total potential returns per unit of risk. Basilea Pharmaceutica AG is currently generating about 0.14 per unit of volatility. If you would invest  4,115  in Basilea Pharmaceutica AG on December 22, 2024 and sell it today you would earn a total of  620.00  from holding Basilea Pharmaceutica AG or generate 15.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Meyer Burger Tech  vs.  Basilea Pharmaceutica AG

Meyer Burger Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Meyer Burger Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Basilea Pharmaceutica

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Basilea Pharmaceutica AG are ranked lower than 11 (%) 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 Meyer Burger and Basilea Pharmaceutica

The main advantage of trading using opposite Meyer Burger and Basilea Pharmaceutica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meyer Burger 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 Meyer Burger Tech 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.