Correlation Between CD Projekt and Bluebird Bio

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

Diversification Opportunities for CD Projekt and Bluebird Bio

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between OTGLY and Bluebird is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CD Projekt SA and Bluebird Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluebird Bio and CD Projekt 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 CD Projekt SA are associated (or correlated) with Bluebird Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluebird Bio has no effect on the direction of CD Projekt i.e., CD Projekt and Bluebird Bio go up and down completely randomly.

Pair Corralation between CD Projekt and Bluebird Bio

Assuming the 90 days horizon CD Projekt SA is expected to generate 0.89 times more return on investment than Bluebird Bio. However, CD Projekt SA is 1.12 times less risky than Bluebird Bio. It trades about -0.01 of its potential returns per unit of risk. Bluebird Bio is currently generating about -0.02 per unit of risk. If you would invest  1,529  in CD Projekt SA on August 30, 2022 and sell it today you would lose (761.00)  from holding CD Projekt SA or give up 49.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.8%
ValuesDaily Returns

CD Projekt SA  vs.  Bluebird Bio

 Performance (%) 
       Timeline  
CD Projekt SA 
OTGLY Performance
16 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in CD Projekt SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, CD Projekt showed solid returns over the last few months and may actually be approaching a breakup point.

OTGLY Price Channel

Bluebird Bio 
Bluebird Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bluebird Bio are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Bluebird Bio exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bluebird Price Channel

CD Projekt and Bluebird Bio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CD Projekt and Bluebird Bio

The main advantage of trading using opposite CD Projekt and Bluebird Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CD Projekt position performs unexpectedly, Bluebird Bio 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 Bluebird Bio will offset losses from the drop in Bluebird Bio's long position.
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The idea behind CD Projekt SA and Bluebird Bio 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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