Correlation Between NEW MILLENNIUM and BB Biotech

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Can any of the company-specific risk be diversified away by investing in both NEW MILLENNIUM and BB Biotech 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 NEW MILLENNIUM and BB Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEW MILLENNIUM IRON and BB Biotech AG, you can compare the effects of market volatilities on NEW MILLENNIUM and BB Biotech 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 NEW MILLENNIUM with a short position of BB Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW MILLENNIUM and BB Biotech.

Diversification Opportunities for NEW MILLENNIUM and BB Biotech

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between NEW and BBZA is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NEW MILLENNIUM IRON and BB Biotech AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Biotech AG and NEW MILLENNIUM 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 NEW MILLENNIUM IRON are associated (or correlated) with BB Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Biotech AG has no effect on the direction of NEW MILLENNIUM i.e., NEW MILLENNIUM and BB Biotech go up and down completely randomly.

Pair Corralation between NEW MILLENNIUM and BB Biotech

Assuming the 90 days trading horizon NEW MILLENNIUM IRON is expected to generate 1.5 times more return on investment than BB Biotech. However, NEW MILLENNIUM is 1.5 times more volatile than BB Biotech AG. It trades about 0.08 of its potential returns per unit of risk. BB Biotech AG is currently generating about -0.11 per unit of risk. If you would invest  780.00  in NEW MILLENNIUM IRON on October 12, 2024 and sell it today you would earn a total of  20.00  from holding NEW MILLENNIUM IRON or generate 2.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

NEW MILLENNIUM IRON  vs.  BB Biotech AG

 Performance 
       Timeline  
NEW MILLENNIUM IRON 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in NEW MILLENNIUM IRON are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, NEW MILLENNIUM may actually be approaching a critical reversion point that can send shares even higher in February 2025.
BB Biotech AG 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BB Biotech AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BB Biotech is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

NEW MILLENNIUM and BB Biotech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NEW MILLENNIUM and BB Biotech

The main advantage of trading using opposite NEW MILLENNIUM and BB Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW MILLENNIUM position performs unexpectedly, BB Biotech 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 BB Biotech will offset losses from the drop in BB Biotech's long position.
The idea behind NEW MILLENNIUM IRON and BB Biotech 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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