Correlation Between Bristol Myers and AC Immune

Can any of the company-specific risk be diversified away by investing in both Bristol Myers and AC Immune 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 and AC Immune 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 AC Immune, you can compare the effects of market volatilities on Bristol Myers and AC Immune 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 with a short position of AC Immune. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and AC Immune.

Diversification Opportunities for Bristol Myers and AC Immune

-0.44

Correlation Coefficient

Bristol Myers  AC Immune

Very good diversification

The 3 months correlation between Bristol and ACIU is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and AC Immune in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AC Immune and Bristol Myers 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 AC Immune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AC Immune has no effect on the direction of Bristol Myers i.e., Bristol Myers and AC Immune go up and down completely randomly.

Pair Corralation between Bristol Myers and AC Immune

Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 0.58 times more return on investment than AC Immune. However, Bristol Myers Squibb is 1.71 times less risky than AC Immune. It trades about 0.12 of its potential returns per unit of risk. AC Immune is currently generating about -0.12 per unit of risk. If you would invest  4,946  in Bristol Myers Squibb on September 21, 2024 and sell it today you would earn a total of  781.50  from holding Bristol Myers Squibb or generate 15.8% return on investment over 90 days.

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

Bristol Myers Squibb  vs.  AC Immune

Bristol Myers Squibb

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Bristol Myers showed solid returns over the last few months and may actually be approaching a breakup point.

AC Immune

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AC Immune has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bristol Myers and AC Immune

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

The idea behind Bristol Myers Squibb and AC Immune 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.