Correlation Between Bellus Health and Regeneron Pharmaceuticals

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

Diversification Opportunities for Bellus Health and Regeneron Pharmaceuticals

0.32
  Correlation Coefficient

Weak diversification

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

Pair Corralation between Bellus Health and Regeneron Pharmaceuticals

Considering the 90-day investment horizon Bellus Health is expected to under-perform the Regeneron Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Bellus Health is 1.69 times less risky than Regeneron Pharmaceuticals. The stock trades about -0.12 of its potential returns per unit of risk. The Regeneron Pharmaceuticals is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  57,397  in Regeneron Pharmaceuticals on July 6, 2022 and sell it today you would earn a total of  16,116  from holding Regeneron Pharmaceuticals or generate 28.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Bellus Health  vs.  Regeneron Pharmaceuticals

 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 comparatively stable essential indicators, Bellus Health is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Bellus Price Channel

Regeneron Pharmaceuticals 
Regeneron Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Regeneron Pharmaceuticals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Regeneron Pharmaceuticals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Regeneron Price Channel

Bellus Health and Regeneron Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bellus Health and Regeneron Pharmaceuticals

The main advantage of trading using opposite Bellus Health and Regeneron Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bellus Health position performs unexpectedly, Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals will offset losses from the drop in Regeneron Pharmaceuticals' long position.
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The idea behind Bellus Health and Regeneron Pharmaceuticals 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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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