Correlation Between Basilea Pharmaceutica and Xlife Sciences

Can any of the company-specific risk be diversified away by investing in both Basilea Pharmaceutica and Xlife Sciences 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 Xlife Sciences 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 Xlife Sciences AG, you can compare the effects of market volatilities on Basilea Pharmaceutica and Xlife Sciences 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 Xlife Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basilea Pharmaceutica and Xlife Sciences.

Diversification Opportunities for Basilea Pharmaceutica and Xlife Sciences

-0.51

Correlation Coefficient

Basilea Pharmaceutica  Xlife Sciences

Excellent diversification

The 3 months correlation between Basilea and Xlife is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Basilea Pharmaceutica AG and Xlife Sciences AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xlife Sciences AG 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 Xlife Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xlife Sciences AG has no effect on the direction of Basilea Pharmaceutica i.e., Basilea Pharmaceutica and Xlife Sciences go up and down completely randomly.

Pair Corralation between Basilea Pharmaceutica and Xlife Sciences

Assuming the 90 days trading horizon Basilea Pharmaceutica AG is expected to generate 0.56 times more return on investment than Xlife Sciences. However, Basilea Pharmaceutica AG is 1.78 times less risky than Xlife Sciences. It trades about 0.22 of its potential returns per unit of risk. Xlife Sciences AG is currently generating about -0.05 per unit of risk. If you would invest  4,210  in Basilea Pharmaceutica AG on April 23, 2025 and sell it today you would earn a total of  1,150  from holding Basilea Pharmaceutica AG or generate 27.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Basilea Pharmaceutica AG  vs.  Xlife Sciences AG

Basilea Pharmaceutica

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Basilea Pharmaceutica AG are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Basilea Pharmaceutica showed solid returns over the last few months and may actually be approaching a breakup point.

Xlife Sciences AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xlife Sciences AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Pair Trading with Basilea Pharmaceutica and Xlife Sciences

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

The idea behind Basilea Pharmaceutica AG and Xlife Sciences 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.