Correlation Between DBV Technologies and Gensight Biologics

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

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

Diversification Opportunities for DBV Technologies and Gensight Biologics

0.08

Correlation Coefficient

DBV Technologies  Gensight Biologics

Significant diversification

The 3 months correlation between DBV and Gensight is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding DBV Technologies 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 DBV Technologies 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 DBV Technologies 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 DBV Technologies i.e., DBV Technologies and Gensight Biologics go up and down completely randomly.

Pair Corralation between DBV Technologies and Gensight Biologics

Assuming the 90 days trading horizon DBV Technologies SA is expected to generate 1.33 times more return on investment than Gensight Biologics. However, DBV Technologies is 1.33 times more volatile than Gensight Biologics SA. It trades about 0.03 of its potential returns per unit of risk. Gensight Biologics SA is currently generating about -0.03 per unit of risk. If you would invest  81.00  in DBV Technologies SA on September 5, 2024 and sell it today you would earn a total of  0.00  from holding DBV Technologies SA or generate 0.0% return on investment over 90 days.

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

DBV Technologies SA  vs.  Gensight Biologics SA

DBV Technologies

Risk-Adjusted Performance

2 of 100

Weak

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

Gensight Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gensight Biologics SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with DBV Technologies and Gensight Biologics

The main advantage of trading using opposite DBV Technologies and Gensight Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBV Technologies 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 DBV Technologies 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.