Correlation Between Bristol Myers and Luye Pharma

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

Diversification Opportunities for Bristol Myers and Luye Pharma

0.72

Correlation Coefficient

Bristol Myers  Luye Pharma

Poor diversification

The 3 months correlation between Bristol and Luye is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Luye Pharma Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luye Pharma Group 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 Luye Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luye Pharma Group has no effect on the direction of Bristol Myers i.e., Bristol Myers and Luye Pharma go up and down completely randomly.

Pair Corralation between Bristol Myers and Luye Pharma

Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 1.63 times more return on investment than Luye Pharma. However, Bristol Myers is 1.63 times more volatile than Luye Pharma Group. It trades about 0.08 of its potential returns per unit of risk. Luye Pharma Group is currently generating about 0.13 per unit of risk. If you would invest  5,183  in Bristol Myers Squibb on October 10, 2024 and sell it today you would earn a total of  498.00  from holding Bristol Myers Squibb or generate 9.61% return on investment over 90 days.

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

Bristol Myers Squibb  vs.  Luye Pharma Group

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.

Luye Pharma Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Luye Pharma Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Luye Pharma may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bristol Myers and Luye Pharma

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

The idea behind Bristol Myers Squibb and Luye Pharma Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.