Correlation Between GM and BB Biotech
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By analyzing existing cross correlation between General Motors and BB Biotech AG, you can compare the effects of market volatilities on GM 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 GM with a short position of BB Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and BB Biotech.
Diversification Opportunities for GM and BB Biotech
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and BBZA is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and BB Biotech go up and down completely randomly.
Pair Corralation between GM and BB Biotech
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.56 times more return on investment than BB Biotech. However, GM is 1.56 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 -0.03 per unit of risk. If you would invest 4,411 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,148 from holding General Motors or generate 26.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.65% |
| Values | Daily Returns |
General Motors vs. BB Biotech AG
Performance |
| Timeline |
| General Motors |
| BB Biotech AG |
GM and BB Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and BB Biotech
The main advantage of trading using opposite GM and BB Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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.| BB Biotech vs. Tyson Foods | BB Biotech vs. AUSTEVOLL SEAFOOD | BB Biotech vs. HF FOODS GRP | BB Biotech vs. Cal Maine Foods |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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