Correlation Between Brickell Biotech and BELLUS Health

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Can any of the company-specific risk be diversified away by investing in both Brickell Biotech and BELLUS Health 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 Brickell Biotech and BELLUS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brickell Biotech and BELLUS Health, you can compare the effects of market volatilities on Brickell Biotech and BELLUS Health 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 Brickell Biotech with a short position of BELLUS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brickell Biotech and BELLUS Health.

Diversification Opportunities for Brickell Biotech and BELLUS Health

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Brickell and BELLUS is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Brickell Biotech and BELLUS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BELLUS Health and Brickell Biotech 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 Brickell Biotech are associated (or correlated) with BELLUS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BELLUS Health has no effect on the direction of Brickell Biotech i.e., Brickell Biotech and BELLUS Health go up and down completely randomly.

Pair Corralation between Brickell Biotech and BELLUS Health

If you would invest  90.00  in Brickell Biotech on December 29, 2023 and sell it today you would earn a total of  0.00  from holding Brickell Biotech or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy4.55%
ValuesDaily Returns

Brickell Biotech  vs.  BELLUS Health

 Performance 
       Timeline  
Brickell Biotech 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Brickell Biotech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Brickell Biotech is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
BELLUS Health 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days BELLUS Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, BELLUS Health is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Brickell Biotech and BELLUS Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brickell Biotech and BELLUS Health

The main advantage of trading using opposite Brickell Biotech and BELLUS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brickell Biotech position performs unexpectedly, BELLUS Health 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 BELLUS Health will offset losses from the drop in BELLUS Health's long position.
The idea behind Brickell Biotech and BELLUS Health 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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