Correlation Between Mettler Toledo and Lonza

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

By analyzing existing cross correlation between Mettler Toledo International and Lonza Group, you can compare the effects of market volatilities on Mettler Toledo and Lonza 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 Mettler Toledo with a short position of Lonza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mettler Toledo and Lonza.

Diversification Opportunities for Mettler Toledo and Lonza

0.48

Correlation Coefficient

Mettler Toledo  Lonza

Very weak diversification

The 3 months correlation between Mettler and Lonza is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Mettler Toledo International and Lonza Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group and Mettler Toledo 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 Mettler Toledo International are associated (or correlated) with Lonza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonza Group has no effect on the direction of Mettler Toledo i.e., Mettler Toledo and Lonza go up and down completely randomly.

Pair Corralation between Mettler Toledo and Lonza

Considering the 90-day investment horizon Mettler Toledo International is expected to under-perform the Lonza. But the stock apears to be less risky and, when comparing its historical volatility, Mettler Toledo International is 2.08 times less risky than Lonza. The stock trades about -0.08 of its potential returns per unit of risk. The Lonza Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  57,720  in Lonza Group on October 12, 2024 and sell it today you would earn a total of  3,230  from holding Lonza Group or generate 5.6% return on investment over 90 days.

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

Mettler Toledo International  vs.  Lonza Group

Mettler Toledo Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mettler Toledo International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Lonza Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lonza Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Lonza is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mettler Toledo and Lonza

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

The idea behind Mettler Toledo International and Lonza Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.