Correlation Between Bristol Myers and Calliditas Therapeutics

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

Diversification Opportunities for Bristol Myers and Calliditas Therapeutics

-0.1

Correlation Coefficient

Bristol Myers  Calliditas Therapeutics

Good diversification

The 3 months correlation between Bristol and Calliditas is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Calliditas Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calliditas Therapeutics 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 Calliditas Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calliditas Therapeutics has no effect on the direction of Bristol Myers i.e., Bristol Myers and Calliditas Therapeutics go up and down completely randomly.

Pair Corralation between Bristol Myers and Calliditas Therapeutics

Considering the 90-day investment horizon Bristol Myers Squibb is expected to under-perform the Calliditas Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Bristol Myers Squibb is 5.91 times less risky than Calliditas Therapeutics. The stock trades about -0.21 of its potential returns per unit of risk. The Calliditas Therapeutics is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,132  in Calliditas Therapeutics on February 29, 2024 and sell it today you would earn a total of  1,663  from holding Calliditas Therapeutics or generate 78.0% return on investment over 90 days.

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

Bristol Myers Squibb  vs.  Calliditas Therapeutics

Bristol Myers Squibb

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Calliditas Therapeutics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Calliditas Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Calliditas Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bristol Myers and Calliditas Therapeutics

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

The idea behind Bristol Myers Squibb and Calliditas Therapeutics 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.