Correlation Between Biophytis and Novacyt

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

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

Diversification Opportunities for Biophytis and Novacyt

0.07

Correlation Coefficient

Biophytis  Novacyt

Significant diversification

The 3 months correlation between Biophytis and Novacyt is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Biophytis SA and Novacyt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novacyt and Biophytis 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 Biophytis SA are associated (or correlated) with Novacyt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novacyt has no effect on the direction of Biophytis i.e., Biophytis and Novacyt go up and down completely randomly.

Pair Corralation between Biophytis and Novacyt

Assuming the 90 days trading horizon Biophytis SA is expected to generate 1.29 times more return on investment than Novacyt. However, Biophytis is 1.29 times more volatile than Novacyt. It trades about 0.06 of its potential returns per unit of risk. Novacyt is currently generating about 0.03 per unit of risk. If you would invest  30.00  in Biophytis SA on November 20, 2024 and sell it today you would earn a total of  3.00  from holding Biophytis SA or generate 10.0% return on investment over 90 days.

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

Biophytis SA  vs.  Novacyt

Biophytis SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Biophytis SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Biophytis reported solid returns over the last few months and may actually be approaching a breakup point.

Novacyt

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Novacyt are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Novacyt may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Biophytis and Novacyt

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

The idea behind Biophytis SA and Novacyt 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.