Correlation Between Lonza Group and Terumo

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

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

Diversification Opportunities for Lonza Group and Terumo

-0.12

Correlation Coefficient

Lonza Group  Terumo

Good diversification

The 3 months correlation between Lonza and Terumo is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lonza Group and Terumo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terumo and Lonza Group 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 Lonza Group are associated (or correlated) with Terumo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terumo has no effect on the direction of Lonza Group i.e., Lonza Group and Terumo go up and down completely randomly.

Pair Corralation between Lonza Group and Terumo

Assuming the 90 days horizon Lonza Group is expected to generate 5.27 times less return on investment than Terumo. But when comparing it to its historical volatility, Lonza Group is 3.1 times less risky than Terumo. It trades about 0.02 of its potential returns per unit of risk. Terumo is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,802  in Terumo on May 6, 2025 and sell it today you would lose (12.00) from holding Terumo or give up 0.67% of portfolio value over 90 days.

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

Lonza Group  vs.  Terumo

Lonza Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lonza Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Lonza Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Terumo

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Terumo are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Terumo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lonza Group and Terumo

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

The idea behind Lonza Group and Terumo 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.