Correlation Between HEALTHCARE REAL and BB Biotech
Can any of the company-specific risk be diversified away by investing in both HEALTHCARE REAL 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 HEALTHCARE REAL and BB Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEALTHCARE REAL A and BB Biotech AG, you can compare the effects of market volatilities on HEALTHCARE REAL 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 HEALTHCARE REAL with a short position of BB Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHCARE REAL and BB Biotech.
Diversification Opportunities for HEALTHCARE REAL and BB Biotech
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between HEALTHCARE and BBZA is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHCARE REAL A 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 HEALTHCARE REAL 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 HEALTHCARE REAL A 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 HEALTHCARE REAL i.e., HEALTHCARE REAL and BB Biotech go up and down completely randomly.
Pair Corralation between HEALTHCARE REAL and BB Biotech
Assuming the 90 days horizon HEALTHCARE REAL A is expected to generate 0.87 times more return on investment than BB Biotech. However, HEALTHCARE REAL A is 1.15 times less risky than BB Biotech. It trades about 0.35 of its potential returns per unit of risk. BB Biotech AG is currently generating about 0.1 per unit of risk. If you would invest 1,521 in HEALTHCARE REAL A on September 1, 2024 and sell it today you would earn a total of 199.00 from holding HEALTHCARE REAL A or generate 13.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
HEALTHCARE REAL A vs. BB Biotech AG
Performance |
| Timeline |
| HEALTHCARE REAL A |
| BB Biotech AG |
HEALTHCARE REAL and BB Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEALTHCARE REAL and BB Biotech
The main advantage of trading using opposite HEALTHCARE REAL and BB Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEALTHCARE REAL 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.| HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc |
| BB Biotech vs. Superior Plus Corp | BB Biotech vs. NMI Holdings | BB Biotech vs. Origin Agritech | BB Biotech vs. SIVERS SEMICONDUCTORS AB |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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