Correlation Between Bristol Myers and Histogen

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

Diversification Opportunities for Bristol Myers and Histogen

-0.49

Correlation Coefficient

Bristol Myers  Histogen

Very good diversification

The 3 months correlation between Bristol and Histogen is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Histogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histogen 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 Histogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Histogen has no effect on the direction of Bristol Myers i.e., Bristol Myers and Histogen go up and down completely randomly.

Pair Corralation between Bristol Myers and Histogen

Considering the 90-day investment horizon Bristol Myers is expected to generate 1.91 times less return on investment than Histogen. But when comparing it to its historical volatility, Bristol Myers Squibb is 2.62 times less risky than Histogen. It trades about 0.09 of its potential returns per unit of risk. Histogen is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.60  in Histogen on December 29, 2024 and sell it today you would earn a total of  0.10  from holding Histogen or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	32.79%
Values	Daily Returns

Bristol Myers Squibb  vs.  Histogen

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 7 (%) 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.

Histogen

Risk-Adjusted Performance

Modest

Over the last 90 days Histogen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Histogen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bristol Myers and Histogen

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

The idea behind Bristol Myers Squibb and Histogen 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.