Correlation Between BB Biotech and PHOENIX N

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

Diversification Opportunities for BB Biotech and PHOENIX N

0.19

Correlation Coefficient

BB Biotech  PHOENIX N

Average diversification

The 3 months correlation between BION and PHOENIX is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and PHOENIX N AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHOENIX N AG 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 PHOENIX N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHOENIX N AG has no effect on the direction of BB Biotech i.e., BB Biotech and PHOENIX N go up and down completely randomly.

Pair Corralation between BB Biotech and PHOENIX N

Assuming the 90 days trading horizon BB Biotech AG is expected to under-perform the PHOENIX N. In addition to that, BB Biotech is 1.32 times more volatile than PHOENIX N AG. It trades about -0.09 of its total potential returns per unit of risk. PHOENIX N AG is currently generating about -0.05 per unit of volatility. If you would invest  43,400  in PHOENIX N AG on October 6, 2024 and sell it today you would lose (400.00) from holding PHOENIX N AG or give up 0.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

BB Biotech AG  vs.  PHOENIX N AG

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

PHOENIX N AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHOENIX N AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with BB Biotech and PHOENIX N

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

The idea behind BB Biotech AG and PHOENIX N 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.