Correlation Between BELLUS Health and Brenntag

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

Diversification Opportunities for BELLUS Health and Brenntag

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between BELLUS and Brenntag is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BELLUS Health and Brenntag SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brenntag SE and BELLUS Health 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 BELLUS Health are associated (or correlated) with Brenntag. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brenntag SE has no effect on the direction of BELLUS Health i.e., BELLUS Health and Brenntag go up and down completely randomly.

Pair Corralation between BELLUS Health and Brenntag

Considering the 90-day investment horizon BELLUS Health is expected to under-perform the Brenntag. In addition to that, BELLUS Health is 8.94 times more volatile than Brenntag SE. It trades about -0.17 of its total potential returns per unit of risk. Brenntag SE is currently generating about 0.24 per unit of volatility. If you would invest  6,128  in Brenntag SE on September 3, 2022 and sell it today you would earn a total of  467.00  from holding Brenntag SE or generate 7.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

BELLUS Health  vs.  Brenntag SE

 Performance (%) 
       Timeline  
BELLUS Health 
BELLUS Performance
0 of 100
Over the last 90 days BELLUS Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

BELLUS Price Channel

Brenntag SE 
Brenntag Performance
0 of 100
Over the last 90 days Brenntag SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Brenntag is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.

Brenntag Price Channel

BELLUS Health and Brenntag Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BELLUS Health and Brenntag

The main advantage of trading using opposite BELLUS Health and Brenntag positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BELLUS Health position performs unexpectedly, Brenntag 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 Brenntag will offset losses from the drop in Brenntag's long position.
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The idea behind BELLUS Health and Brenntag SE 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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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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