Correlation Between Bachem Holding and Sonova H

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

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

Diversification Opportunities for Bachem Holding and Sonova H

0.29

Correlation Coefficient

Bachem Holding  Sonova H

Modest diversification

The 3 months correlation between Bachem and Sonova is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bachem Holding AG and Sonova H Ag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonova H Ag and Bachem 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 Bachem Holding AG are associated (or correlated) with Sonova H. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonova H Ag has no effect on the direction of Bachem Holding i.e., Bachem Holding and Sonova H go up and down completely randomly.

Pair Corralation between Bachem Holding and Sonova H

Assuming the 90 days trading horizon Bachem Holding AG is expected to under-perform the Sonova H. In addition to that, Bachem Holding is 1.13 times more volatile than Sonova H Ag. It trades about -0.11 of its total potential returns per unit of risk. Sonova H Ag is currently generating about -0.02 per unit of volatility. If you would invest  30,350  in Sonova H Ag on September 15, 2024 and sell it today you would lose (950.00) from holding Sonova H Ag or give up 3.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Bachem Holding AG  vs.  Sonova H Ag

Bachem Holding AG

Risk-Adjusted Performance

0 of 100

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sonova H Ag

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonova H Ag has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sonova H is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Bachem Holding and Sonova H

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

The idea behind Bachem Holding AG and Sonova H 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.