Correlation Between Bristol-Myers Squibb and Living Cell
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and Living Cell 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 Squibb and Living Cell 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 Living Cell Technologies, you can compare the effects of market volatilities on Bristol-Myers Squibb and Living Cell 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 Squibb with a short position of Living Cell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and Living Cell.
Diversification Opportunities for Bristol-Myers Squibb and Living Cell
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bristol-Myers and Living is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Living Cell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Living Cell Technologies and Bristol-Myers Squibb 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 Living Cell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Living Cell Technologies has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Living Cell go up and down completely randomly.
Pair Corralation between Bristol-Myers Squibb and Living Cell
Assuming the 90 days horizon Bristol-Myers Squibb is expected to generate 112.66 times less return on investment than Living Cell. But when comparing it to its historical volatility, Bristol Myers Squibb is 10.87 times less risky than Living Cell. It trades about 0.0 of its potential returns per unit of risk. Living Cell Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1.48 in Living Cell Technologies on September 4, 2024 and sell it today you would lose (1.05) from holding Living Cell Technologies or give up 70.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 45.05% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Living Cell Technologies
Performance |
| Timeline |
| Bristol Myers Squibb |
| Living Cell Technologies |
Bristol-Myers Squibb and Living Cell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol-Myers Squibb and Living Cell
The main advantage of trading using opposite Bristol-Myers Squibb and Living Cell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, Living Cell 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 Living Cell will offset losses from the drop in Living Cell's long position.| Bristol-Myers Squibb vs. Novartis AG | Bristol-Myers Squibb vs. Bayer AG | Bristol-Myers Squibb vs. Astellas Pharma | Bristol-Myers Squibb vs. Roche Holding AG |
| Living Cell vs. Therapeutic Solutions International | Living Cell vs. Alpha Cognition | Living Cell vs. Vg Life Sciences | Living Cell vs. Adagene |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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