Correlation Between Amicus Therapeutics and Bellus Health

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

Diversification Opportunities for Amicus Therapeutics and Bellus Health

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Amicus and Bellus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Amicus Therapeutics and Bellus Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellus Health and Amicus Therapeutics 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 Amicus Therapeutics 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 Amicus Therapeutics i.e., Amicus Therapeutics and Bellus Health go up and down completely randomly.

Pair Corralation between Amicus Therapeutics and Bellus Health

Given the investment horizon of 90 days Amicus Therapeutics is expected to generate 1.08 times more return on investment than Bellus Health. However, Amicus Therapeutics is 1.08 times more volatile than Bellus Health. It trades about -0.05 of its potential returns per unit of risk. Bellus Health is currently generating about -0.08 per unit of risk. If you would invest  1,119  in Amicus Therapeutics on July 7, 2022 and sell it today you would lose (48.00)  from holding Amicus Therapeutics or give up 4.29% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Amicus Therapeutics  vs.  Bellus Health

 Performance (%) 
       Timeline  
Amicus Therapeutics 
Amicus Performance
0 of 100
Over the last 90 days Amicus Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Amicus Therapeutics is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Amicus Price Channel

Bellus Health 
Bellus Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bellus Health are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Bellus Health may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Bellus Price Channel

Amicus Therapeutics and Bellus Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amicus Therapeutics and Bellus Health

The main advantage of trading using opposite Amicus Therapeutics and Bellus Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amicus Therapeutics 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.
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The idea behind Amicus Therapeutics 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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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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