Correlation Between Banque Cantonale and BB Biotech

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

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

Diversification Opportunities for Banque Cantonale and BB Biotech

-0.25

Correlation Coefficient

Banque Cantonale  BB Biotech

Very good diversification

The 3 months correlation between Banque and BION is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Banque Cantonale du 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 Banque Cantonale 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 Banque Cantonale du 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 Banque Cantonale i.e., Banque Cantonale and BB Biotech go up and down completely randomly.

Pair Corralation between Banque Cantonale and BB Biotech

Assuming the 90 days trading horizon Banque Cantonale du is expected to under-perform the BB Biotech. But the stock apears to be less risky and, when comparing its historical volatility, Banque Cantonale du is 2.48 times less risky than BB Biotech. The stock trades about -0.07 of its potential returns per unit of risk. The BB Biotech AG is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,715  in BB Biotech AG on September 12, 2024 and sell it today you would lose (15.00) from holding BB Biotech AG or give up 0.4% of portfolio value over 90 days.

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

Banque Cantonale du  vs.  BB Biotech AG

Banque Cantonale

Risk-Adjusted Performance

0 of 100

Very Weak

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

BB Biotech AG

Risk-Adjusted Performance

0 of 100

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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Banque Cantonale and BB Biotech

The main advantage of trading using opposite Banque Cantonale and BB Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banque Cantonale 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.

The idea behind Banque Cantonale du and BB Biotech 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.