Correlation Between BELLUS Health and Freeport-McMoran

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

Diversification Opportunities for BELLUS Health and Freeport-McMoran

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between BELLUS and Freeport-McMoran is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding BELLUS Health and Freeport-McMoran Copper Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport-McMoran Copper 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 Freeport-McMoran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport-McMoran Copper has no effect on the direction of BELLUS Health i.e., BELLUS Health and Freeport-McMoran go up and down completely randomly.

Pair Corralation between BELLUS Health and Freeport-McMoran

Considering the 90-day investment horizon BELLUS Health is expected to generate 1.41 times more return on investment than Freeport-McMoran. However, BELLUS Health is 1.41 times more volatile than Freeport-McMoran Copper Gold. It trades about 0.07 of its potential returns per unit of risk. Freeport-McMoran Copper Gold is currently generating about 0.04 per unit of risk. If you would invest  348.00  in BELLUS Health on September 2, 2022 and sell it today you would earn a total of  639.00  from holding BELLUS Health or generate 183.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

BELLUS Health  vs.  Freeport-McMoran Copper Gold

 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 unfluctuating performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2023. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BELLUS Price Channel

Freeport-McMoran Copper 
Freeport-McMoran Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Freeport-McMoran Copper Gold are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Freeport-McMoran showed solid returns over the last few months and may actually be approaching a breakup point.

Freeport-McMoran Price Channel

BELLUS Health and Freeport-McMoran Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BELLUS Health and Freeport-McMoran

The main advantage of trading using opposite BELLUS Health and Freeport-McMoran positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BELLUS Health position performs unexpectedly, Freeport-McMoran 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 Freeport-McMoran will offset losses from the drop in Freeport-McMoran's long position.
BELLUS Health vs. HP Inc
The idea behind BELLUS Health and Freeport-McMoran Copper Gold 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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