Correlation Between MULTI UNITS and BB Biotech

Can any of the company-specific risk be diversified away by investing in both MULTI UNITS and BB Biotech 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 MULTI UNITS and BB Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MULTI UNITS LUXEMBOURG and BB Biotech AG, you can compare the effects of market volatilities on MULTI UNITS and BB Biotech 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 MULTI UNITS with a short position of BB Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of MULTI UNITS and BB Biotech.

Diversification Opportunities for MULTI UNITS and BB Biotech

0.13

Correlation Coefficient

MULTI UNITS  BB Biotech

Average diversification

The 3 months correlation between MULTI and BION is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding MULTI UNITS LUXEMBOURG and BB Biotech AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Biotech AG and MULTI UNITS 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 MULTI UNITS LUXEMBOURG are associated (or correlated) with BB Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Biotech AG has no effect on the direction of MULTI UNITS i.e., MULTI UNITS and BB Biotech go up and down completely randomly.

Pair Corralation between MULTI UNITS and BB Biotech

Assuming the 90 days trading horizon MULTI UNITS LUXEMBOURG is expected to generate 0.63 times more return on investment than BB Biotech. However, MULTI UNITS LUXEMBOURG is 1.59 times less risky than BB Biotech. It trades about 0.2 of its potential returns per unit of risk. BB Biotech AG is currently generating about 0.02 per unit of risk. If you would invest  17,006  in MULTI UNITS LUXEMBOURG on September 12, 2024 and sell it today you would earn a total of  1,692  from holding MULTI UNITS LUXEMBOURG or generate 9.95% return on investment over 90 days.

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

MULTI UNITS LUXEMBOURG   vs.  BB Biotech AG

MULTI UNITS LUXEMBOURG

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MULTI UNITS LUXEMBOURG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, MULTI UNITS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BB Biotech AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BB Biotech AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, BB Biotech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with MULTI UNITS and BB Biotech

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

The idea behind MULTI UNITS LUXEMBOURG and BB Biotech AG 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.