Correlation Between Santhera Pharmaceuticals and Lonza Group
Can any of the company-specific risk be diversified away by investing in both Santhera Pharmaceuticals and Lonza Group 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 Santhera Pharmaceuticals and Lonza Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santhera Pharmaceuticals Holding and Lonza Group AG, you can compare the effects of market volatilities on Santhera Pharmaceuticals and Lonza Group 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 Santhera Pharmaceuticals with a short position of Lonza Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santhera Pharmaceuticals and Lonza Group.
Diversification Opportunities for Santhera Pharmaceuticals and Lonza Group
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Santhera and Lonza is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Santhera Pharmaceuticals Holdi and Lonza Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group AG and Santhera Pharmaceuticals 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 Santhera Pharmaceuticals Holding are associated (or correlated) with Lonza Group. 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 AG has no effect on the direction of Santhera Pharmaceuticals i.e., Santhera Pharmaceuticals and Lonza Group go up and down completely randomly.
Pair Corralation between Santhera Pharmaceuticals and Lonza Group
Assuming the 90 days trading horizon Santhera Pharmaceuticals Holding is expected to generate 2.65 times more return on investment than Lonza Group. However, Santhera Pharmaceuticals is 2.65 times more volatile than Lonza Group AG. It trades about 0.58 of its potential returns per unit of risk. Lonza Group AG is currently generating about 0.21 per unit of risk. If you would invest 900.00 in Santhera Pharmaceuticals Holding on October 11, 2024 and sell it today you would earn a total of 508.00 from holding Santhera Pharmaceuticals Holding or generate 56.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Santhera Pharmaceuticals Holdi vs. Lonza Group AG
Performance |
Timeline |
Santhera Pharmaceuticals |
Lonza Group AG |
Santhera Pharmaceuticals and Lonza Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Santhera Pharmaceuticals and Lonza Group
The main advantage of trading using opposite Santhera Pharmaceuticals and Lonza Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santhera Pharmaceuticals position performs unexpectedly, Lonza Group 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 Group will offset losses from the drop in Lonza Group's long position.Santhera Pharmaceuticals vs. Basilea Pharmaceutica AG | Santhera Pharmaceuticals vs. Idorsia | Santhera Pharmaceuticals vs. Newron Pharmaceuticals SpA | Santhera Pharmaceuticals vs. Evolva Holding SA |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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