Correlation Between Straumann Holding and Idorsia

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

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

Diversification Opportunities for Straumann Holding and Idorsia

0.82

Correlation Coefficient

Straumann Holding  Idorsia

Very poor diversification

The 3 months correlation between Straumann and Idorsia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Straumann Holding AG and Idorsia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idorsia and Straumann 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 Straumann Holding AG are associated (or correlated) with Idorsia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idorsia has no effect on the direction of Straumann Holding i.e., Straumann Holding and Idorsia go up and down completely randomly.

Pair Corralation between Straumann Holding and Idorsia

Assuming the 90 days trading horizon Straumann Holding is expected to generate 11.37 times less return on investment than Idorsia. But when comparing it to its historical volatility, Straumann Holding AG is 13.67 times less risky than Idorsia. It trades about 0.1 of its potential returns per unit of risk. Idorsia is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Idorsia on September 27, 2024 and sell it today you would lose (3.00) from holding Idorsia or give up 3.95% of portfolio value over 90 days.

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

Straumann Holding AG  vs.  Idorsia

Straumann Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Straumann 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.

Idorsia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idorsia 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 Straumann Holding and Idorsia

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

The idea behind Straumann Holding AG and Idorsia 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.