Correlation Between Alcon AG and Bonesupport Holding

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

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

Diversification Opportunities for Alcon AG and Bonesupport Holding

-0.62

Correlation Coefficient

Alcon AG  Bonesupport Holding

Excellent diversification

The 3 months correlation between Alcon and Bonesupport is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Alcon AG and Bonesupport Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonesupport Holding and Alcon AG 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 Alcon AG are associated (or correlated) with Bonesupport Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonesupport Holding has no effect on the direction of Alcon AG i.e., Alcon AG and Bonesupport Holding go up and down completely randomly.

Pair Corralation between Alcon AG and Bonesupport Holding

Considering the 90-day investment horizon Alcon AG is expected to under-perform the Bonesupport Holding. But the stock apears to be less risky and, when comparing its historical volatility, Alcon AG is 2.34 times less risky than Bonesupport Holding. The stock trades about -0.19 of its potential returns per unit of risk. The Bonesupport Holding AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,101  in Bonesupport Holding AB on September 21, 2024 and sell it today you would earn a total of  115.00  from holding Bonesupport Holding AB or generate 3.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Alcon AG  vs.  Bonesupport Holding AB

Alcon AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alcon AG 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 essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Bonesupport Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bonesupport Holding AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Bonesupport Holding is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alcon AG and Bonesupport Holding

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

The idea behind Alcon AG and Bonesupport Holding AB 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.