Correlation Between Bristol Myers and Collplant Biotechnologies

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

Diversification Opportunities for Bristol Myers and Collplant Biotechnologies

0.2

Correlation Coefficient

Bristol Myers  Collplant Biotechnologies

Modest diversification

The 3 months correlation between Bristol and Collplant is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Collplant Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collplant Biotechnologies 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 Collplant Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collplant Biotechnologies has no effect on the direction of Bristol Myers i.e., Bristol Myers and Collplant Biotechnologies go up and down completely randomly.

Pair Corralation between Bristol Myers and Collplant Biotechnologies

Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 0.47 times more return on investment than Collplant Biotechnologies. However, Bristol Myers Squibb is 2.12 times less risky than Collplant Biotechnologies. It trades about 0.0 of its potential returns per unit of risk. Collplant Biotechnologies is currently generating about -0.12 per unit of risk. If you would invest  5,862  in Bristol Myers Squibb on November 27, 2024 and sell it today you would lose (41.00) from holding Bristol Myers Squibb or give up 0.7% of portfolio value over 90 days.

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

Bristol Myers Squibb  vs.  Collplant Biotechnologies

Bristol Myers Squibb

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bristol Myers Squibb has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Bristol Myers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Collplant Biotechnologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Collplant Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bristol Myers and Collplant Biotechnologies

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

The idea behind Bristol Myers Squibb and Collplant Biotechnologies 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.