Correlation Between Inficon Holding and Bachem Holding

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

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

Diversification Opportunities for Inficon Holding and Bachem Holding

0.23

Correlation Coefficient

Inficon Holding  Bachem Holding

Modest diversification

The 3 months correlation between Inficon and Bachem is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Inficon Holding and Bachem Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bachem Holding AG and Inficon 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 Inficon Holding are associated (or correlated) with Bachem Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bachem Holding AG has no effect on the direction of Inficon Holding i.e., Inficon Holding and Bachem Holding go up and down completely randomly.

Pair Corralation between Inficon Holding and Bachem Holding

Assuming the 90 days trading horizon Inficon Holding is expected to generate 0.87 times more return on investment than Bachem Holding. However, Inficon Holding is 1.14 times less risky than Bachem Holding. It trades about -0.11 of its potential returns per unit of risk. Bachem Holding AG is currently generating about -0.11 per unit of risk. If you would invest  115,000  in Inficon Holding on September 17, 2024 and sell it today you would lose (13,600) from holding Inficon Holding or give up 11.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Inficon Holding  vs.  Bachem Holding AG

Inficon Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inficon Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

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.

Pair Trading with Inficon Holding and Bachem Holding

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

The idea behind Inficon Holding and Bachem Holding 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.