Correlation Between Biophytis and LNA Sante

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

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

Diversification Opportunities for Biophytis and LNA Sante

-0.22

Correlation Coefficient

Biophytis  LNA Sante

Very good diversification

The 3 months correlation between Biophytis and LNA is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Biophytis SA and LNA Sante SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LNA Sante SA 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 LNA Sante. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LNA Sante SA has no effect on the direction of Biophytis i.e., Biophytis and LNA Sante go up and down completely randomly.

Pair Corralation between Biophytis and LNA Sante

Assuming the 90 days trading horizon Biophytis SA is expected to generate 2.17 times more return on investment than LNA Sante. However, Biophytis is 2.17 times more volatile than LNA Sante SA. It trades about -0.01 of its potential returns per unit of risk. LNA Sante SA is currently generating about -0.13 per unit of risk. If you would invest  31.00  in Biophytis SA on September 4, 2024 and sell it today you would lose (1.00) from holding Biophytis SA or give up 3.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Biophytis SA  vs.  LNA Sante SA

Biophytis SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biophytis SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

LNA Sante SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LNA Sante SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LNA Sante is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Biophytis and LNA Sante

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

The idea behind Biophytis SA and LNA Sante 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.