Correlation Between Generation Bio and InflaRx NV

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

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

Diversification Opportunities for Generation Bio and InflaRx NV

-0.92

Correlation Coefficient

Generation Bio  InflaRx NV

Pay attention - limited upside

The 3 months correlation between Generation and InflaRx is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Generation Bio Co and InflaRx NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InflaRx NV and Generation Bio 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 Generation Bio Co are associated (or correlated) with InflaRx NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InflaRx NV has no effect on the direction of Generation Bio i.e., Generation Bio and InflaRx NV go up and down completely randomly.

Pair Corralation between Generation Bio and InflaRx NV

Given the investment horizon of 90 days Generation Bio Co is expected to under-perform the InflaRx NV. But the stock apears to be less risky and, when comparing its historical volatility, Generation Bio Co is 1.03 times less risky than InflaRx NV. The stock trades about -0.1 of its potential returns per unit of risk. The InflaRx NV is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  251.00  in InflaRx NV on October 25, 2024 and sell it today you would lose (1.00) from holding InflaRx NV or give up 0.4% of portfolio value over 90 days.

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

Generation Bio Co  vs.  InflaRx NV

Generation Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generation Bio Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

InflaRx NV

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in InflaRx NV are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, InflaRx NV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Generation Bio and InflaRx NV

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

The idea behind Generation Bio Co and InflaRx NV 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 Transaction History module to view history of all your transactions and understand their impact on performance.