Correlation Between SCANDION ONC and Ipsen SA

Can any of the company-specific risk be diversified away by investing in both SCANDION ONC and Ipsen SA 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 SCANDION ONC and Ipsen SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SCANDION ONC DK 0735 and Ipsen SA, you can compare the effects of market volatilities on SCANDION ONC and Ipsen SA 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 SCANDION ONC with a short position of Ipsen SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANDION ONC and Ipsen SA.

Diversification Opportunities for SCANDION ONC and Ipsen SA

0.68

Correlation Coefficient

SCANDION ONC  Ipsen SA

Poor diversification

The 3 months correlation between SCANDION and Ipsen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SCANDION ONC DK 0735 and Ipsen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsen SA and SCANDION ONC 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 SCANDION ONC DK 0735 are associated (or correlated) with Ipsen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsen SA has no effect on the direction of SCANDION ONC i.e., SCANDION ONC and Ipsen SA go up and down completely randomly.

Pair Corralation between SCANDION ONC and Ipsen SA

Assuming the 90 days horizon SCANDION ONC DK 0735 is expected to generate 10.58 times more return on investment than Ipsen SA. However, SCANDION ONC is 10.58 times more volatile than Ipsen SA. It trades about 0.0 of its potential returns per unit of risk. Ipsen SA is currently generating about 0.01 per unit of risk. If you would invest  17.00  in SCANDION ONC DK 0735 on October 4, 2024 and sell it today you would lose (16.34) from holding SCANDION ONC DK 0735 or give up 96.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SCANDION ONC DK 0735  vs.  Ipsen SA

SCANDION ONC DK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCANDION ONC DK 0735 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ipsen SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ipsen SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ipsen SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SCANDION ONC and Ipsen SA

The main advantage of trading using opposite SCANDION ONC and Ipsen SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCANDION ONC position performs unexpectedly, Ipsen SA 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 Ipsen SA will offset losses from the drop in Ipsen SA's long position.

The idea behind SCANDION ONC DK 0735 and Ipsen SA 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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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 the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.