Correlation Between BB Biotech and Bellevue Group

Can any of the company-specific risk be diversified away by investing in both BB Biotech and Bellevue Group 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 BB Biotech and Bellevue Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BB Biotech AG and Bellevue Group AG, you can compare the effects of market volatilities on BB Biotech and Bellevue Group 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 BB Biotech with a short position of Bellevue Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Biotech and Bellevue Group.

Diversification Opportunities for BB Biotech and Bellevue Group

-0.19

Correlation Coefficient

BB Biotech  Bellevue Group

Good diversification

The 3 months correlation between BION and Bellevue is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and Bellevue Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellevue Group AG and BB Biotech 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 BB Biotech AG are associated (or correlated) with Bellevue Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellevue Group AG has no effect on the direction of BB Biotech i.e., BB Biotech and Bellevue Group go up and down completely randomly.

Pair Corralation between BB Biotech and Bellevue Group

Assuming the 90 days trading horizon BB Biotech AG is expected to generate 0.87 times more return on investment than Bellevue Group. However, BB Biotech AG is 1.15 times less risky than Bellevue Group. It trades about -0.04 of its potential returns per unit of risk. Bellevue Group AG is currently generating about -0.36 per unit of risk. If you would invest  3,755  in BB Biotech AG on September 17, 2024 and sell it today you would lose (140.00) from holding BB Biotech AG or give up 3.73% of portfolio value over 90 days.

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

BB Biotech AG  vs.  Bellevue Group AG

BB Biotech AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BB Biotech AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, BB Biotech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Bellevue Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bellevue Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with BB Biotech and Bellevue Group

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

The idea behind BB Biotech AG and Bellevue Group 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.