Correlation Between Bristol Myers and Kokoh Inti
Can any of the company-specific risk be diversified away by investing in both Bristol Myers and Kokoh Inti 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 Kokoh Inti 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 Kokoh Inti Arebama, you can compare the effects of market volatilities on Bristol Myers and Kokoh Inti 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 Kokoh Inti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Kokoh Inti.
Diversification Opportunities for Bristol Myers and Kokoh Inti
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bristol and Kokoh is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Kokoh Inti Arebama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kokoh Inti Arebama 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 Kokoh Inti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kokoh Inti Arebama has no effect on the direction of Bristol Myers i.e., Bristol Myers and Kokoh Inti go up and down completely randomly.
Pair Corralation between Bristol Myers and Kokoh Inti
Considering the 90-day investment horizon Bristol Myers Squibb is expected to generate 0.35 times more return on investment than Kokoh Inti. However, Bristol Myers Squibb is 2.83 times less risky than Kokoh Inti. It trades about -0.1 of its potential returns per unit of risk. Kokoh Inti Arebama is currently generating about -0.04 per unit of risk. If you would invest 6,764 in Bristol Myers Squibb on January 19, 2024 and sell it today you would lose (1,934) from holding Bristol Myers Squibb or give up 28.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.17% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Kokoh Inti Arebama
Performance |
| Timeline |
| Bristol Myers Squibb |
| Kokoh Inti Arebama |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bristol Myers and Kokoh Inti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and Kokoh Inti
The main advantage of trading using opposite Bristol Myers and Kokoh Inti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers position performs unexpectedly, Kokoh Inti 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 Kokoh Inti will offset losses from the drop in Kokoh Inti's long position.The idea behind Bristol Myers Squibb and Kokoh Inti Arebama 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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