Correlation Between Bristol Myers and Zenvia

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

Diversification Opportunities for Bristol Myers and Zenvia

0.38

Correlation Coefficient

Bristol Myers  Zenvia

Weak diversification

The 3 months correlation between Bristol and Zenvia is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Zenvia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zenvia Inc 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 Zenvia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zenvia Inc has no effect on the direction of Bristol Myers i.e., Bristol Myers and Zenvia go up and down completely randomly.

Pair Corralation between Bristol Myers and Zenvia

Assuming the 90 days horizon Bristol Myers is expected to generate 11.64 times less return on investment than Zenvia. But when comparing it to its historical volatility, Bristol Myers Squibb is 2.19 times less risky than Zenvia. It trades about 0.03 of its potential returns per unit of risk. Zenvia Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  141.00  in Zenvia Inc on October 12, 2024 and sell it today you would earn a total of  123.00  from holding Zenvia Inc or generate 87.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Bristol Myers Squibb  vs.  Zenvia Inc

Bristol Myers Squibb

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, Bristol Myers may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Zenvia Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zenvia Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Zenvia showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bristol Myers and Zenvia

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

The idea behind Bristol Myers Squibb and Zenvia Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.