Correlation Between Basilea Pharmaceutica and Histogen

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

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

Diversification Opportunities for Basilea Pharmaceutica and Histogen

-0.22

Correlation Coefficient

Basilea Pharmaceutica  Histogen

Very good diversification

The 3 months correlation between Basilea and Histogen is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Basilea Pharmaceutica AG and Histogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histogen and Basilea Pharmaceutica 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 Basilea Pharmaceutica AG are associated (or correlated) with Histogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Histogen has no effect on the direction of Basilea Pharmaceutica i.e., Basilea Pharmaceutica and Histogen go up and down completely randomly.

Pair Corralation between Basilea Pharmaceutica and Histogen

Assuming the 90 days horizon Basilea Pharmaceutica AG is expected to generate 0.03 times more return on investment than Histogen. However, Basilea Pharmaceutica AG is 34.93 times less risky than Histogen. It trades about 0.13 of its potential returns per unit of risk. Histogen is currently generating about -0.11 per unit of risk. If you would invest  5,126  in Basilea Pharmaceutica AG on September 3, 2024 and sell it today you would earn a total of  157.00  from holding Basilea Pharmaceutica AG or generate 3.06% return on investment over 90 days.

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

Basilea Pharmaceutica AG  vs.  Histogen

Basilea Pharmaceutica

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Basilea Pharmaceutica AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Basilea Pharmaceutica is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Histogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Histogen 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 very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Basilea Pharmaceutica and Histogen

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

The idea behind Basilea Pharmaceutica AG and Histogen 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.