Correlation Between BB Biotech and Berner Kantonalbank

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

Diversification Opportunities for BB Biotech and Berner Kantonalbank

-0.56

Correlation Coefficient

BB Biotech  Berner Kantonalbank

Excellent diversification

The 3 months correlation between BION and Berner is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and Berner Kantonalbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berner Kantonalbank 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 Berner Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berner Kantonalbank has no effect on the direction of BB Biotech i.e., BB Biotech and Berner Kantonalbank go up and down completely randomly.

Pair Corralation between BB Biotech and Berner Kantonalbank

Assuming the 90 days trading horizon BB Biotech AG is expected to under-perform the Berner Kantonalbank. In addition to that, BB Biotech is 2.09 times more volatile than Berner Kantonalbank AG. It trades about -0.05 of its total potential returns per unit of risk. Berner Kantonalbank AG is currently generating about 0.04 per unit of volatility. If you would invest  21,158  in Berner Kantonalbank AG on October 10, 2024 and sell it today you would earn a total of  2,642  from holding Berner Kantonalbank AG or generate 12.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

BB Biotech AG  vs.  Berner Kantonalbank AG

BB Biotech AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BB Biotech AG are ranked lower than 1 (%) 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.

Berner Kantonalbank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Berner Kantonalbank AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Berner Kantonalbank is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with BB Biotech and Berner Kantonalbank

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

The idea behind BB Biotech AG and Berner Kantonalbank 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.