Correlation Between Bio Path and Bristol Myers

Can any of the company-specific risk be diversified away by investing in both Bio Path and Bristol Myers 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 Bio Path and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bio Path Holdings and Bristol Myers Squibb, you can compare the effects of market volatilities on Bio Path and Bristol Myers 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 Bio Path with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Path and Bristol Myers.

Diversification Opportunities for Bio Path and Bristol Myers

-0.43

Correlation Coefficient

Bio Path  Bristol Myers

Very good diversification

The 3 months correlation between Bio and Bristol is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bio Path Holdings and Bristol Myers Squibb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myers Squibb and Bio Path 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 Bio Path Holdings are associated (or correlated) with Bristol Myers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myers Squibb has no effect on the direction of Bio Path i.e., Bio Path and Bristol Myers go up and down completely randomly.

Pair Corralation between Bio Path and Bristol Myers

Given the investment horizon of 90 days Bio Path Holdings is expected to under-perform the Bristol Myers. In addition to that, Bio Path is 3.42 times more volatile than Bristol Myers Squibb. It trades about -0.05 of its total potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.16 per unit of volatility. If you would invest  4,771  in Bristol Myers Squibb on August 25, 2024 and sell it today you would earn a total of  1,052  from holding Bristol Myers Squibb or generate 22.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bio Path Holdings  vs.  Bristol Myers Squibb

Bio Path Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bio Path Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Bristol Myers Squibb

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Bristol Myers showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bio Path and Bristol Myers

The main advantage of trading using opposite Bio Path and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Path position performs unexpectedly, Bristol Myers 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 Bristol Myers will offset losses from the drop in Bristol Myers' long position.

The idea behind Bio Path Holdings and Bristol Myers Squibb 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.