Correlation Between Bristol Myers and Belite Bio
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Belite Bio 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 Bristol Myers and Belite Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bristol Myers Squibb and Belite Bio ADR, you can compare the effects of market volatilities on Bristol Myers and Belite Bio 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 Bristol Myers with a short position of Belite Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Belite Bio.
Diversification Opportunities for Bristol Myers and Belite Bio
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bristol and Belite is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Belite Bio ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belite Bio ADR and Bristol Myers 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 Bristol Myers Squibb are associated (or correlated) with Belite Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belite Bio ADR has no effect on the direction of Bristol Myers i.e., Bristol Myers and Belite Bio go up and down completely randomly.
Pair Corralation between Bristol Myers and Belite Bio
Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 0.64 times more return on investment than Belite Bio. However, Bristol Myers Squibb is 1.55 times less risky than Belite Bio. It trades about 0.15 of its potential returns per unit of risk. Belite Bio ADR is currently generating about 0.08 per unit of risk. If you would invest 4,069 in Bristol Myers Squibb on September 1, 2024 and sell it today you would earn a total of 1,853 from holding Bristol Myers Squibb or generate 45.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Belite Bio ADR
Performance |
| Timeline |
| Bristol Myers Squibb |
| Belite Bio ADR |
Bristol Myers and Belite Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and Belite Bio
The main advantage of trading using opposite Bristol Myers and Belite Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Belite Bio 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 Belite Bio will offset losses from the drop in Belite Bio's long position.| Bristol Myers vs. Crinetics Pharmaceuticals | Bristol Myers vs. Enanta Pharmaceuticals | Bristol Myers vs. Amicus Therapeutics | Bristol Myers vs. Connect Biopharma Holdings |
| Belite Bio vs. Anebulo Pharmaceuticals | Belite Bio vs. Mineralys Therapeutics, Common | Belite Bio vs. AN2 Therapeutics | Belite Bio vs. Aerovate Therapeutics |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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