Correlation Between Bristol Myers and CareCloud

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

Diversification Opportunities for Bristol Myers and CareCloud

0.8

Correlation Coefficient

Bristol Myers  CareCloud

Very poor diversification

The 3 months correlation between Bristol and CareCloud is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and CareCloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareCloud 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 CareCloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareCloud has no effect on the direction of Bristol Myers i.e., Bristol Myers and CareCloud go up and down completely randomly.

Pair Corralation between Bristol Myers and CareCloud

Considering the 90-day investment horizon Bristol Myers Squibb is expected to under-perform the CareCloud. But the stock apears to be less risky and, when comparing its historical volatility, Bristol Myers Squibb is 3.35 times less risky than CareCloud. The stock trades about -0.01 of its potential returns per unit of risk. The CareCloud is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,198  in CareCloud on October 10, 2024 and sell it today you would lose (307.00) from holding CareCloud or give up 13.97% of portfolio value over 90 days.

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

Bristol Myers Squibb  vs.  CareCloud

Bristol Myers Squibb

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Bristol Myers may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CareCloud

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CareCloud are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, CareCloud displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bristol Myers and CareCloud

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

The idea behind Bristol Myers Squibb and CareCloud 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.