Correlation Between Bristol Myers and Compugen

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

Diversification Opportunities for Bristol Myers and Compugen

-0.23

Correlation Coefficient

Bristol Myers  Compugen

Very good diversification

The 3 months correlation between Bristol and Compugen is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Compugen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugen 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 Compugen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compugen has no effect on the direction of Bristol Myers i.e., Bristol Myers and Compugen go up and down completely randomly.

Pair Corralation between Bristol Myers and Compugen

Considering the 90-day investment horizon Bristol Myers is expected to generate 1.18 times less return on investment than Compugen. But when comparing it to its historical volatility, Bristol Myers Squibb is 3.02 times less risky than Compugen. It trades about 0.07 of its potential returns per unit of risk. Compugen is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  150.00  in Compugen on December 29, 2024 and sell it today you would earn a total of  2.00  from holding Compugen or generate 1.33% return on investment over 90 days.

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

Bristol Myers Squibb  vs.  Compugen

Bristol Myers Squibb

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 5 (%) 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 April 2025.

Compugen

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compugen are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Compugen may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bristol Myers and Compugen

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

The idea behind Bristol Myers Squibb and Compugen 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.