Correlation Between BB Biotech and Leonteq AG

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

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

Diversification Opportunities for BB Biotech and Leonteq AG

-0.36

Correlation Coefficient

BB Biotech  Leonteq AG

Very good diversification

The 3 months correlation between BION and Leonteq is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and Leonteq AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leonteq AG and BB Biotech 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 BB Biotech AG are associated (or correlated) with Leonteq AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leonteq AG has no effect on the direction of BB Biotech i.e., BB Biotech and Leonteq AG go up and down completely randomly.

Pair Corralation between BB Biotech and Leonteq AG

Assuming the 90 days trading horizon BB Biotech AG is expected to generate 0.57 times more return on investment than Leonteq AG. However, BB Biotech AG is 1.74 times less risky than Leonteq AG. It trades about -0.04 of its potential returns per unit of risk. Leonteq AG is currently generating about -0.19 per unit of risk. If you would invest  3,760  in BB Biotech AG on September 15, 2024 and sell it today you would lose (145.00) from holding BB Biotech AG or give up 3.86% of portfolio value over 90 days.

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

BB Biotech AG  vs.  Leonteq AG

BB Biotech AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Leonteq AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leonteq 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.

Pair Trading with BB Biotech and Leonteq AG

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

The idea behind BB Biotech AG and Leonteq 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.