Correlation Between Biophytis and Gensight Biologics

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

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

Diversification Opportunities for Biophytis and Gensight Biologics

0.65

Correlation Coefficient

Biophytis  Gensight Biologics

Poor diversification

The 3 months correlation between Biophytis and Gensight is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Biophytis SA and Gensight Biologics SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gensight Biologics 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 Gensight Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gensight Biologics has no effect on the direction of Biophytis i.e., Biophytis and Gensight Biologics go up and down completely randomly.

Pair Corralation between Biophytis and Gensight Biologics

Assuming the 90 days trading horizon Biophytis SA is expected to under-perform the Gensight Biologics. But the stock apears to be less risky and, when comparing its historical volatility, Biophytis SA is 1.1 times less risky than Gensight Biologics. The stock trades about -0.17 of its potential returns per unit of risk. The Gensight Biologics SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Gensight Biologics SA on September 3, 2024 and sell it today you would lose (1.00) from holding Gensight Biologics SA or give up 2.63% of portfolio value over 90 days.

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

Biophytis SA  vs.  Gensight Biologics 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.

Gensight Biologics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gensight Biologics SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Gensight Biologics is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Biophytis and Gensight Biologics

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

The idea behind Biophytis SA and Gensight Biologics 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.

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 the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.