Correlation Between Medartis Holding and Bachem Holding

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

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

Diversification Opportunities for Medartis Holding and Bachem Holding

-0.47

Correlation Coefficient

Medartis Holding  Bachem Holding

Very good diversification

The 3 months correlation between Medartis and Bachem is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Medartis Holding AG and Bachem Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bachem Holding AG and Medartis 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 Medartis Holding AG are associated (or correlated) with Bachem Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bachem Holding AG has no effect on the direction of Medartis Holding i.e., Medartis Holding and Bachem Holding go up and down completely randomly.

Pair Corralation between Medartis Holding and Bachem Holding

Assuming the 90 days trading horizon Medartis Holding AG is expected to generate 1.24 times more return on investment than Bachem Holding. However, Medartis Holding is 1.24 times more volatile than Bachem Holding AG. It trades about 0.25 of its potential returns per unit of risk. Bachem Holding AG is currently generating about -0.06 per unit of risk. If you would invest  5,660  in Medartis Holding AG on December 28, 2024 and sell it today you would earn a total of  2,090  from holding Medartis Holding AG or generate 36.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Medartis Holding AG  vs.  Bachem Holding AG

Medartis Holding

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Medartis Holding AG are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Medartis Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Bachem Holding AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bachem Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Medartis Holding and Bachem Holding

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

The idea behind Medartis Holding AG and Bachem Holding 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.