Correlation Between Chimerix and Innate Pharma

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

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

Diversification Opportunities for Chimerix and Innate Pharma

0.21

Correlation Coefficient

Chimerix  Innate Pharma

Modest diversification

The 3 months correlation between Chimerix and Innate is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Chimerix and Innate Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innate Pharma and Chimerix 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 Chimerix are associated (or correlated) with Innate Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innate Pharma has no effect on the direction of Chimerix i.e., Chimerix and Innate Pharma go up and down completely randomly.

Pair Corralation between Chimerix and Innate Pharma

Given the investment horizon of 90 days Chimerix is expected to generate 1.94 times more return on investment than Innate Pharma. However, Chimerix is 1.94 times more volatile than Innate Pharma. It trades about 0.2 of its potential returns per unit of risk. Innate Pharma is currently generating about 0.0 per unit of risk. If you would invest  322.00  in Chimerix on December 26, 2024 and sell it today you would earn a total of  528.50  from holding Chimerix or generate 164.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Chimerix  vs.  Innate Pharma

Chimerix

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chimerix are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chimerix showed solid returns over the last few months and may actually be approaching a breakup point.

Innate Pharma

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Chimerix and Innate Pharma

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

The idea behind Chimerix and Innate Pharma 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.