Correlation Between BB Biotech and 21Shares Tezos

Can any of the company-specific risk be diversified away by investing in both BB Biotech and 21Shares Tezos 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 21Shares Tezos 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 21Shares Tezos staking, you can compare the effects of market volatilities on BB Biotech and 21Shares Tezos 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 21Shares Tezos. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Biotech and 21Shares Tezos.

Diversification Opportunities for BB Biotech and 21Shares Tezos

-0.09

Correlation Coefficient

BB Biotech  21Shares Tezos

Good diversification

The 3 months correlation between BION and 21Shares is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and 21Shares Tezos staking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21Shares Tezos staking 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 21Shares Tezos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Shares Tezos staking has no effect on the direction of BB Biotech i.e., BB Biotech and 21Shares Tezos go up and down completely randomly.

Pair Corralation between BB Biotech and 21Shares Tezos

Assuming the 90 days trading horizon BB Biotech AG is expected to generate 0.21 times more return on investment than 21Shares Tezos. However, BB Biotech AG is 4.8 times less risky than 21Shares Tezos. It trades about -0.12 of its potential returns per unit of risk. 21Shares Tezos staking is currently generating about -0.11 per unit of risk. If you would invest  3,775  in BB Biotech AG on October 7, 2024 and sell it today you would lose (110.00) from holding BB Biotech AG or give up 2.91% 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.  21Shares Tezos staking

BB Biotech AG

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BB Biotech AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

21Shares Tezos staking

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Tezos staking are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, 21Shares Tezos showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BB Biotech and 21Shares Tezos

The main advantage of trading using opposite BB Biotech and 21Shares Tezos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Biotech position performs unexpectedly, 21Shares Tezos 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 21Shares Tezos will offset losses from the drop in 21Shares Tezos' long position.

The idea behind BB Biotech AG and 21Shares Tezos staking 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.