Correlation Between Bristol Myers and Inhibikase Therapeutics

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

Diversification Opportunities for Bristol Myers and Inhibikase Therapeutics

0.71

Correlation Coefficient

Bristol Myers  Inhibikase Therapeutics

Poor diversification

The 3 months correlation between Bristol and Inhibikase is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Inhibikase Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inhibikase Therapeutics 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 Inhibikase Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inhibikase Therapeutics has no effect on the direction of Bristol Myers i.e., Bristol Myers and Inhibikase Therapeutics go up and down completely randomly.

Pair Corralation between Bristol Myers and Inhibikase Therapeutics

Considering the 90-day investment horizon Bristol Myers Squibb is expected to under-perform the Inhibikase Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Bristol Myers Squibb is 4.29 times less risky than Inhibikase Therapeutics. The stock trades about 0.0 of its potential returns per unit of risk. The Inhibikase Therapeutics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  367.00  in Inhibikase Therapeutics on August 31, 2024 and sell it today you would lose (94.00) from holding Inhibikase Therapeutics or give up 25.61% of portfolio value over 90 days.

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

Bristol Myers Squibb  vs.  Inhibikase Therapeutics

Bristol Myers Squibb

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Bristol Myers showed solid returns over the last few months and may actually be approaching a breakup point.

Inhibikase Therapeutics

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inhibikase Therapeutics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking signals, Inhibikase Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bristol Myers and Inhibikase Therapeutics

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

The idea behind Bristol Myers Squibb and Inhibikase Therapeutics 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.