Correlation Between Genfit and ADMA Biologics

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

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

Diversification Opportunities for Genfit and ADMA Biologics

-0.2

Correlation Coefficient

Genfit  ADMA Biologics

Good diversification

The 3 months correlation between Genfit and ADMA is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Genfit and ADMA Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADMA Biologics and Genfit 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 Genfit are associated (or correlated) with ADMA Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADMA Biologics has no effect on the direction of Genfit i.e., Genfit and ADMA Biologics go up and down completely randomly.

Pair Corralation between Genfit and ADMA Biologics

Given the investment horizon of 90 days Genfit is expected to under-perform the ADMA Biologics. But the stock apears to be less risky and, when comparing its historical volatility, Genfit is 1.01 times less risky than ADMA Biologics. The stock trades about -0.01 of its potential returns per unit of risk. The ADMA Biologics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,789  in ADMA Biologics on December 25, 2024 and sell it today you would earn a total of  243.00  from holding ADMA Biologics or generate 13.58% return on investment over 90 days.

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

Genfit  vs.  ADMA Biologics

Genfit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genfit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Genfit is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ADMA Biologics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADMA Biologics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, ADMA Biologics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genfit and ADMA Biologics

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

The idea behind Genfit and ADMA Biologics 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.